Parity Pricing and Its Critics: A Necessary Condition for Efficiency in the Provision of Bottleneck Services to Competitors

This paper discusses proper pricing of a monopoly input needed by both its owner and its owner\u27s competitors in the final-product market. This issue is central to current litigation in courts and regulatory agencies throughout the world\u27s industrial nations as competitive entry, deregulation, and privatization proceed. A new, simplified proof shows that only pricing based on what has come to be called the parity-pricing formula or efficient component-pricing rule ( ECPR ) permits economic efficiency and competitive neutrality-giving neither the bottleneck owner nor its rivals a competitive advantage in final-product sales, aside from any derived from superior productive efficiency. This paper comments on a number of recent discussions of ECPR, showing that the bulk of their reservations, while valid, do not undermine ECPR, but, instead, call for supplementary rules that we have advocated all along

ANTITRUST POLICY AND HIGH-TECHNOLOGY INDUSTRIES

antitrust legislation ; technology ; competitiveness

Parity Pricing and Its Critics: Necessary Condition for Efficiency in Provision of Bottleneck Services to Competitors.

The paper will show tha bottleneck input service sold by its owner to competitors in the supply of final product must be priced in accord with ECPR if ineffeciency in resource allocation is to be prevented.PRICING;COMPETITION;MONOPOLIES

Collusion through Joint R&D: An Empirical Assessment

This paper tests whether upstream R&D cooperation leads to downstream collusion. We consider an oligopolistic setting where firms enter in research joint ventures (RJVs) to lower production costs or coordinate on collusion in the product market. We show that a sufficient condition for identifying collusive behavior is a decline in the market share of RJV-participating firms, which is also necessary and sufficient for a decrease in consumer welfare. Using information from the US National Cooperation Research Act, we estimate a market share equation correcting for the endogeneity of RJV participation and R&D expenditures. We find robust evidence that large networks between direct competitors – created through firms being members in several RJVs at the same time – are conducive to collusive outcomes in the product market which reduce consumer welfare. By contrast, RJVs among non-competitors are efficiency enhancing

On the perils of vertical control by a partial owner of a downstream enterprise

[eng] The paper examines the various cases which can exist in the vertical relation between an upstream enterprise, owner of a bottleneck facility, and a downstream enterprise, obliged to use this facility. It shows that (only) in the case in which the downstream firm is a partial owner to the upstream firm, the possibility exists for a diversion of business, away from the most efficient solution. [fre] Cet article examine les divers cas de figure que peut revêtir la relation verticale entre une entreprise détenant les actifs à titre exclusif et une entreprise de produits finals obligée de faire appel à cette entreprise amont. Il montre que dans le cas (et uniquement dans ce cas) où l'entreprise aval contrôle partiellement l'entreprise amont elle peut détourner une partie de l'activité, au détriment de la solution optimale.

WHAT PRICE THEORY CAN-AND CANNOT-DO FOR ANTITRUST

This paper examines the methodology and policy recommendations of Judge Robert Bork's writing on antitrust. It accepts as valid his premise that conventional price theory is the only appropriate organon for evaluating the welfare impact of an antitrust rule. However, it holds that in the analysis of cartels and mergers, Bork does not realize the full implications of his approach. Copyright 1984 Western Economic Association International.