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The Essential Facilities Concept

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An essential facilities doctrine specifies when the owner(s) of an “essential” or “bottleneck” facility is mandated to provide access to that facility at a “reasonable” price. For example, such a doctrine might specify when a railroad must be made available on reasonable terms to a rival rail company or an electricity transmission grid to a rival electricity generator. Topics covered include the access regime, interoperability --that different systems, products, and services work together transparent --and standards, the importance of market definition in defining an essential facility, single versus joint ownership of an essential facility, legitimate reasons to deny access, and possible remedies. There is an important distinction among public, private but regulated, and private unregulated facilities because mandatory access can diminish private incentives to invest and to innovate.

Page Count: 36
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Document Type: Review Article

Publication date: December 1, 1999

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