Access price regulation and price discrimination in intermediate goods markets

Arbeitspapier

We consider a model of a monopolistic network operator who sequentially offers two-parted access charges to symmetric downstream firms. We are particularly interested in analyzing an alternative to current regulatory practice of prescribing access. In particular, we look at the possibility of restraining the input monopolist's market power by endowing downstream firms with a regulatory option: In case they disagree with the contracts proposed to them, downstream firms can claim a regulated access price. It turns out that this form of regulation may prevent foreclosure even though allowing for price discrimination in the intermediary market. It proves itself more beneficial to welfare than the current practice of prescribing access prices above marginal cost. Interestingly, even though one expects discrimination against the first mover, non-discriminatory input prices below cost can occur when the monopolist faces the alternative of a rather strictly cost-oriented regulated access price. Non-discrimination rules will either not become effective or result in less optimal price levels.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 731

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Oligopoly and Other Imperfect Markets ; Transactional Relationships; Contracts and Reputation; Networks ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts
• Subject: price discrimination ; vertical contracting ; exclusion ; regulatory outside option ; Netzzugang ; Lieferanten-Kunden-Beziehung ; Preisdifferenzierung ; Vertragstheorie ; Staatliche Preispolitik ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Salim, Claudia
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/27255
• Last update: 10.03.2025, 11:45 AM CET