A Simple Access Pricing Rule to Achieve the Ramsey Outcome in Two-Way Access
Universitat Pompeu Fabra - Faculty of Economic and Business Sciences
UPF Economics and Business Working Paper 808
In this paper, I consider a general and informational efficient approach to determine the optimal access rule and show that there exists a simple rule that achieves the Ramsey outcome as the unique equilibrium when networks compete in linear prices without network-based price discrimination. My approach is informationally effcient in the sense that the regulator is required to know only the marginal cost structure, i.e. the marginal cost of making and terminating a call. The approach is general in that access prices can depend not only on the marginal costs but also on the retail prices, which can be observed by consumers and therefore by the regulator as well. In particular, I consider the set of linear access pricing rules which includes any fixed access price, the Efficient Component Pricing Rule (ECPR) and the Modified ECPR as special cases. I show that in this set, there is a unique access rule that achieves the Ramsey outcome as the unique equilibrium as long as there exists at least a mild degree of substitutability among networks' services.
Number of Pages in PDF File: 24
Keywords: Networks, access pricing, interconnection, competition policy
JEL Classification: D4, K21, L41, L51, L96working papers series
Date posted: November 16, 2005
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo4 in 0.406 seconds