Access and Interconnection Pricing: How Efficient is the "Efficient Component Pricing Rule"?

23 Pages Posted: 19 Jul 1995

See all articles by Nicholas Economides

Nicholas Economides

New York University - Leonard N. Stern School of Business - Department of Economics

Lawrence J. White

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

Date Written: March 1995

Abstract

This paper critiques some of the properties of the so-called "efficient component pricing rule" (ECPR) for access to a bottleneck (monopoly) facility. When a rival and the bottleneck monopolist both produce a complementary component to the bottleneck service, the ECPR specifies that the access fee paid by the rival to the monopolist should be equal to the monopolist's opportunity costs of providing access, including any forgone revenues from a concomitant reduction in the monopolist's sales of the complementary component. We focus especially on the case in which the monopolist's price for the complementary component is above all relevant marginal costs. In this case the ECPR's exclusion of rivals may be socially harmful, since it may be preventing a substantial decrease in the price of the complementary component.

JEL Classification: L1, L5, L2

Suggested Citation

Economides, Nicholas and White, Lawrence J., Access and Interconnection Pricing: How Efficient is the "Efficient Component Pricing Rule"? (March 1995). NYU Stern School of Business EC-95-04; Antitrust Bulletin, 1995. Available at SSRN: https://ssrn.com/abstract=15114 or http://dx.doi.org/10.2139/ssrn.15114

Nicholas Economides (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

44 West 4th Street
New York, NY 10012
United States
212-998-0864 (Phone)
212-995-4218 (Fax)

HOME PAGE: http://www.stern.nyu.edu/networks/

Lawrence J. White

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
427
Abstract Views
2,615
rank
67,845
PlumX Metrics