This paper critiques some of the properties of the so-called "efficient component pricing rule" (ECPR) for access to a bottleneck (monopoly) facility. When an entrant/rival and the bottleneck monopolist both produce a complementary component to the bottleneck service, the ECPR specifies that the access fee paid by the rival to the monopolist should be equal to the monopolist's opportunity costs of providing access, including any forgone revenues from a concomitant reduction in the monopolist's sales of the complementary component. We focus especially on the case in which the monopolist's price for the complementary component is above all relevant marginal costs. In this case the ECPR's exclusion of rivals may be socially harmful, since it may be preventing a substantial decrease in the price of the complementary component.

Published in The Antitrust Bulletin, vol. XL, no. 3, (Fall 1995), pp. 557-579.

* Stern School of Business, New York, NY 10012, tel. (212) 998-0864, fax (212) 995-4218, e-mail: neconomi@stern.nyu.edu, lwhite@stern.nyu.edu, www: http://www.stern.nyu.edu/networks/

The authors thank Timothy Brennan for helpful comments on an earlier draft of this article. The authors also thank the participants at the CEPR/CREST-LEI conference on Mobile Telephony, the "Utilities Regulation Network" conference at the Catholic University of Milan, and of the 1995 Annual National Conference of Economic Research in France for helpful comments.

in Acrobat format. If you do not have an Acrobat reader, you can download it free from Adobe.