The Inefficiency of the Ecpr Yet Again: A Reply to Larson

Economides, Nicholas; White, Lawrence J.

doi:10.2139/ssrn.139264

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The Inefficiency of the Ecpr Yet Again: A Reply to Larson

18 Pages Posted: 28 Jan 1999

See all articles by Nicholas Economides

Nicholas Economides

New York University - Leonard N. Stern School of Business - Department of Economics

Lawrence J. White

Stern School of Business, New York University; New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

Date Written: February 1996

Abstract

We extend the results of our article, "Access and Interconnection Pricing? How Efficient Is the 'Efficient Component Pricing Rule'?," Antitrust Bulletin (1995). In the presence of a monopolized essential input, we show that application of the Efficient Component Pricing Rule ("ECPR") in pricing this input to downstream competitors perpetuates monopoly distortions and high prices of final goods services. We show these results for various demand conditions, including conditions that are accepted to hold in the telecommunications sector. We also respond to various criticisms raised by A. Larson in "The Efficiency of the Efficient-Component-Pricing Rule: A Comment," Antitrust Bulletin, (this issue) (1998).

JEL Classification: L12, L96

Suggested Citation: Suggested Citation

Economides, Nicholas and White, Lawrence J. and White, Lawrence J., The Inefficiency of the Ecpr Yet Again: A Reply to Larson (February 1996). Available at SSRN: https://ssrn.com/abstract=139264 or http://dx.doi.org/10.2139/ssrn.139264