Competitive Neutrality Via Differential Access Pricing: Preservation of Desired Cross Subsidies Under Competitive Entry

This article proposes a regulatory system of non-uniform and competitively beutral pricing of access to the services of a bottleneck facility such as the local loop owned by a local telephone company. To be deemed a bottleneck the facility must be owned as a monopoly, and its services must be indispensable inputs of the final products of competing suppliers. It is shown that the proposed pricing rule is competitively neutral, meaning that it does not favor incumbents in teh final-product market over entrants or the inverse.