A Retail Benchmarking Approach To Efficient Two-Way Access Pricing
Source: Universitat Pompeu Fabra
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 linear prices, they show that there is a unique linear rule that implements the Ramsey outcome as the unique equilibrium, independently of the underlying demand conditions. In the case of competition in two-part tarsi, they consider a class of access pricing rules, similar to the optimal one under linear prices but based on average retail prices.