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© 1997 Oxford University Press

research-article

Network Access Pricing and Deregulation

DANIEL F. SPULBER and J. GREGORY SIDAK1

J.L. Kellogg Graduate School of Management, Northwestern University Leverone Hall 606, Evanston, II, 60208, USA
1American Enterprise Institute for Public Research 1150 17th St., N. W., Washington, DC 20036, USA

Abstract

The paper addresses the question of pricing access to the network facilities of an incumbent firm after deregulation. Network access pricing continues to be regulated in such industries as telecommunications, railroads, eletric power and natural gas. We emphasize that access prices should be set such that they satisfy an individual rationality condition for the incumbent firm so that access is granted voluntarily. We examine the effects of the voluntary access condition incentives for entry and show that properly chosen access prices incentives for efficient entry using several alternative competition models: Bertrand–Nash, Cournot–Nash and competition Chamberlin with differentiated products.


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