Quantity-Discount Contracts as a Barrier to Entry

16 Pages Posted: 8 Jan 2005

See all articles by Thomas Randolph Beard

Thomas Randolph Beard

Auburn University - Department of Economics

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Lawrence J. Spiwak

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Date Written: November 2004

Abstract

This POLICY PAPER presents an economic model showing how incumbent local exchange carriers may deter efficient facilities-based entry for high capacity loop facilities through the use of quantity-discount contracts for Special Access services. Since efficient entry is deterred, these contracts are socially inefficient. The theoretical model also shows that the entry-deterring effects of the contracts are eliminated if high-capacity circuits are made available at prices based on economic costs (e.g., TELRIC) and made available without use restrictions historically applied to such access. To foster efficient facilities-based entry, federal policies must address the entry-deterring components of Special Access contracts and make high-capacity facilities available on an unbundled basis at cost-based prices.

Keywords: Special Access, Telecommunications, Market Power, De-Regulation

JEL Classification: K23, L10, L50, L96, O33, 038

Suggested Citation

Beard, Thomas Randolph and Ford, George S. and Spiwak, Lawrence J., Quantity-Discount Contracts as a Barrier to Entry (November 2004). Phoenix Center Policy Paper No. 20. Available at SSRN: https://ssrn.com/abstract=644603 or http://dx.doi.org/10.2139/ssrn.644603

Thomas Randolph Beard

Auburn University - Department of Economics ( email )

415 W. Magnolia
Auburn, AL 36849-5242
United States

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Lawrence J. Spiwak (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States
202-274-0235 (Phone)
202-318-4909 (Fax)

HOME PAGE: http://www.phoenix-center.org

Register to save articles to
your library

Register

Paper statistics

Downloads
137
Abstract Views
1,114
rank
209,260
PlumX Metrics