This paper considers the problem of excess entry in vertically related markets
when the regulator can regulate market structure and access charges.
The endogenous access charge introduces an asymmetry between firms which
affects the degree of excess entry. I find that the excess entry result of Mankiw
and Whinston (1986) does not generally carry over to vertically related markets.
It is shown that regulating access charges combined with no structure
regulation is always the best option. For an interval of the downstream fixed
cost, no regulation of the access charge yields the same level of welfare as the
regulated case
