The Baumol-willig Rule under Socially Optimal Non-linear Pricing*

How should one regulate access to a network? The aim of this paper is to consider the optimality of a simple rule, the Efficient Component Pricing Rule (ECPR), under non-linear pricing for intermediate and final goods. The analysis focuses on the interactions between regulation and competition in a second degree price discrimination setting. Rather specific assumptions regarding competition and pricing are generally made by the related literature. Enlarging the pricing options we show the ECPR rule to be relatively robust as a guide to social optimality when the incumbent remains the monopolist of an intermediate good (e.g. a network facility) consumed both internally and by a potential competitor.