A Retail Benchmarking Approach To Effcient Two-Way Access Pricing: Two-Part Tariffs
Source: NET Institute
The authors study a retail benchmarking approach to determine access prices for interconnected networks. Instead of considering fixed access charges as in the existing literature, they study access pricing rules that determine the access price that network i pays to network j as a linear function of the marginal costs and the retail prices set by both networks. In the case of competition in two-part tariffs, they consider a class of access pricing rules, similar to the optimal one under competition in linear prices, derived by Jeon (2005), but based on average retail prices. They show that firms choose the variable price equal to the marginal cost under the class of rules.