Chris Nash, Research Professor – University of Leeds
EU directives allow non discriminatory mark-ups where necessary to achieve financial equilibrium provided that they do not exclude any market segments willing to pay direct cost. Economic theory suggests that such markups may efficiently be levied using two part tariffs (but except in the case of franchises these are generally seen as anti competitive) or Ramsey pricing (i.e. differentiating according to the price elasticity of demand). The problems and potential of both approaches will be discussed, drawing particularly on British experience.