The purpose of the paper is (1) to analyze the potential and the incentives for a vertically integrated input monopolist to engage in price-discrimination when there is downstream entry, and (2) to examine the question, whether a cost-based regulation of access charges for electricity grids...

The question of third-party access to the networks has become central to the debate around the liberalisation of the European electricity markets due to the natural monopoly characteristic of the transmission network. The European Union's electricity directive provides three institutional...