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The access pricing problem: a synthesis

Armstrong, M.; Doyle, C.; Vickers, J.; (1996) The access pricing problem: a synthesis. Journal of Industrial Economics , 44 (2) pp. 131-150.

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The Baumol-Willig efficient component pricing rule states that it is efficient to set the price of access to an essential facility equal to the direct cost of access plus the opportunity cost to the integrated access provider. The authors analyze the relevant notion of 'opportunity cost' under various assumptions about demand and supply conditions, including product differentiation, bypass, and substitution possibilities, which all reduce opportunity cost compared to the benchmark case. They show that the Ramsey approach to access pricing developed by J.-J. Laffont and J. Tirole (1994) is closely related to the efficient component pricing rule provided opportunity cost is correctly interpreted.

Type: Article
Title: The access pricing problem: a synthesis
Publisher version: http://www3.interscience.wiley.com/journal/1179724...
Language: English
Additional information: This issue is not currently available online. Please see http://eprints.ucl.ac.uk/15060/ and http://eprints.ucl.ac.uk/15061/ for details of versions of this paper from the Discussion Paper Series In Economics And Econometrics.
Keywords: JEL classification: L11, L12, L51. Component pricing, pricing, product differentiation
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/15062
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