Access to an Essential Facility: Efficient Component Pricing Rule or Unrestricted Private Property Rights?
Posted: 29 Dec 1999
In this paper we compare the access to an essential facility in two different property rights regimes. In the first, the owner of the facility has an unrestricted private property right on the essential facility. In the second, access is regulated according to the efficient component pricing rule. Proponents of the second regime claim that this rule is efficient, for it forecloses the complementary market only to inefficient producers. We prove that, as far as entry is concerned, the two legal frameworks are equivalent if we do not consider the possibility of the transfer of the property right, and that if this is allowed the efficient component pricing rule might exclude efficient suppliers.
JEL Classification: L13, L40
Suggested Citation: Suggested Citation