Access pricing and market structure

In telecommunications industries access charge problems are important issues during deregulation. In Japan and the US, deregulation also involves the issue of industrial structures as integration or divestiture of a long-distance sector. This paper analyzes access charge problems by introducing effects of the divestiture on cost functions. We show how the effects influence economic welfare under the integration and the divestiture in the Stackelberg model. The main result is that, without regulation, welfare losses, caused by an effect of double marginalization in the divestiture case, are not crucial when an entrant and a divested long-distance firm can make use of an efficient cost function. We also obtain a relationship between Ramsey access charges and the Efficient Component Pricing Rule.  2001 Elsevier Science B.V. All rights reserved.