Can Evidence of Pricing Power Help Market Power Assessment? Broadband Internet in Ireland and the Netherlands
24 Pages Posted: 24 Jun 2011 Last revised: 24 Dec 2013
Date Written: August 30, 2011
Abstract
This article proposes a simple hedonic price test to assess whether firms may have pricing power in the provision of differentiated services. The test allows to compare prices of providers of differentiated products on a like-for-like basis. Testing for pricing power could be a useful complement to more traditional or computationally and data demanding techniques in the assessment of market power. The test was applied to broadband Internet access services in Ireland and the Netherlands. Results appear encouraging as they are broadly aligned to the decisions of the regulatory authorities in both countries that the incumbent DSL operators had market power at the time.
Keywords: market power, pricing power, hedonic pricing, broadband
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