Instrument Insufficiency in Access-Pricing Regulation

• Autor(a) principal: Leite, António Nogueira
• Data de Publicação: 1997
• Outros Autores: Santos, Vasco, Seabra, Carmo
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/88731
• topic: Access price; Telecommunications; Externalities

Access prices to bottleneck facilities are usually set by regulatory authorities due to anti-trust reasons: owners of bottleneck facilities have an incentive to charge socially undesirable access prices. We show that welfare-maximizing access prices may not be implementable due to what we term instrument insufficiency, and relate the likelihood of instrument insufficiency to cost and demand parameters. industry structure and ownership, type of competitive behavior in the downstream market. and (other) economic policies followed. We conduct the inquiry by considering a market structure and regulatory setup closely adhering to the reality of telecommunications markets. We consider a two-tier industry structure in which the monopolist producer of a bottleneck input also operates in the downstream market, facing competition from a fixed number of non-integrated firms. The regulator sets the upstream and access prices, but not the downstream price, and the number of downstream firms (and their ownership or control) is exogenously given, thus there not being free entry and profits not being nil.