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Equally Efficient Competitor and the Case of Deutsche Telekom: Economic Perspective

Received: 2 February 2015     Accepted: 26 February 2015     Published: 18 March 2015
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Abstract

We examine the implication of the assumption in two types of regulatory environments that a new entrant is an equally efficient competitor, on which the price squeeze test is built. Under partial regulation the entrant exits a market because of the higher access rates set by the authority. If we consider this assumption under no regulation, the entrant exits the market by its own inefficiency, and not by the exclusionary strategies of the incumbent. Regardless of the regulatory environments, the incumbent is not responsible for the exit and the assumption is contradictory to the EC decision.

Published in International Journal of Economic Behavior and Organization (Volume 3, Issue 2-1)

This article belongs to the Special Issue Recent Developments of Economic Theory and Its Applications

DOI 10.11648/j.ijebo.s.2015030201.17
Page(s) 39-45
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Equally Efficient Competitor, Regulatory Environment, Exit of Entrant, 2003 EC Decision, Case of Deutsche Telekom

References
[1] Armstrong, M. (2002),“The Theory of Access Pricing and Interconnection" in The Handbook of Telecommunications Economics (Vol 1)., ed. by M. Caves et al., Amsterdam, The Netherlands: North-Holland; 297-384.
[2] Bork, R. (1978), The Antitrust Paradox: A Policy at War with Itself, New York: Basic Books.
[3] Bouckaert, J. and Verboven, F. (2004),“Price Squeezes in a Regulatory Environment," Journal of Regulatory Economics, 26(3), .321-51.
[4] Bruno, J, Rey, P. and Saavedra, C. (2013), “The Economics of Margin Squeeze," IDIE Report.
[5] Carlton, W. (2008),“Should “Price Squeeze" Be a Recognized Form of Anticompetitive Conduct?", Journal of Competition Law and Economics, 4(2), 271-278.
[6] European Commission (1998), “Notice on the Application of the Competition Rules to Access Agreements in the Telecommunications Sector," 98/C: 265/02. (also in Official Journal of the European Union C 265, 22/08/1998: 2-28.)
[7] European Commission (2003), “Commission Decision of 21 May 2003 relating a proceeding under Article 82 of the EC Treaty ", Official Journal of the European Union L 263, 9-41.
[8] Petulowa, M. and Saavedra, C. (2013),“Margine Squeeze in a Regulatory Environment: An Application to Differentiated Product Markets", mimeo.
[9] Rey, P. and Tirole, J. (2007),“A Primer on Foreclosure," in Handbook of Industrial Organization Vol.3, ed. by M. Armstrong and R.H. Porter, Amsterdam, The Netherlands: North-Holland, 2145-2220.
[10] Salop, S. (2010), “Refusals to Deal and Price Squeeze By an Unregulated, Vertically Integrated Monopolist," Antitrust Law Journal, 76(3), 709-740.
[11] Sidak, J. G. (2008), “Abolishing the Price Squeeze as a Theory of Antitrust Liability", Journal of Competition Law and Economics, 4(2), 279-309.
[12] Weisman, D. L. (2003), “Vertical Integration and Telecommunications," in The International Handbook of Telecommunications Economics Vol.1, ed. by G. Madden, Northampton, MA: Edward Elgar, 232-255.
[13] Yang, C. and Kawashima, Y. (2011), “Is Price Squeeze Optimal Strategy for Integrated Firms ?," Discussion Paper No. 171, Institute of Economic Research, Chuo University.
Cite This Article
  • APA Style

    Yasuo Kawashima, Nobufumi Nishimura. (2015). Equally Efficient Competitor and the Case of Deutsche Telekom: Economic Perspective. International Journal of Economic Behavior and Organization, 3(2-1), 39-45. https://doi.org/10.11648/j.ijebo.s.2015030201.17

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    ACS Style

    Yasuo Kawashima; Nobufumi Nishimura. Equally Efficient Competitor and the Case of Deutsche Telekom: Economic Perspective. Int. J. Econ. Behav. Organ. 2015, 3(2-1), 39-45. doi: 10.11648/j.ijebo.s.2015030201.17

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    AMA Style

    Yasuo Kawashima, Nobufumi Nishimura. Equally Efficient Competitor and the Case of Deutsche Telekom: Economic Perspective. Int J Econ Behav Organ. 2015;3(2-1):39-45. doi: 10.11648/j.ijebo.s.2015030201.17

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  • @article{10.11648/j.ijebo.s.2015030201.17,
      author = {Yasuo Kawashima and Nobufumi Nishimura},
      title = {Equally Efficient Competitor and the Case of Deutsche Telekom: Economic Perspective},
      journal = {International Journal of Economic Behavior and Organization},
      volume = {3},
      number = {2-1},
      pages = {39-45},
      doi = {10.11648/j.ijebo.s.2015030201.17},
      url = {https://doi.org/10.11648/j.ijebo.s.2015030201.17},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijebo.s.2015030201.17},
      abstract = {We examine the implication of the assumption in two types of regulatory environments that a new entrant is an equally efficient competitor, on which the price squeeze test is built. Under partial regulation the entrant exits a market because of the higher access rates set by the authority. If we consider this assumption under no regulation, the entrant exits the market by its own inefficiency, and not by the exclusionary strategies of the incumbent. Regardless of the regulatory environments, the incumbent is not responsible for the exit and the assumption is contradictory to the EC decision.},
     year = {2015}
    }
    

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    AB  - We examine the implication of the assumption in two types of regulatory environments that a new entrant is an equally efficient competitor, on which the price squeeze test is built. Under partial regulation the entrant exits a market because of the higher access rates set by the authority. If we consider this assumption under no regulation, the entrant exits the market by its own inefficiency, and not by the exclusionary strategies of the incumbent. Regardless of the regulatory environments, the incumbent is not responsible for the exit and the assumption is contradictory to the EC decision.
    VL  - 3
    IS  - 2-1
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Author Information
  • Faculty of Economics, Chuo University, Tokyo, Japan

  • Faculty of Law, Chuo University, Tokyo, Japan

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