Academic

This article proposes a definition of creamskimming that will help state and federal regulatory agencies distinguish genuine objections to proposed competitive entry from reflexive (and often improper) efforts to shield incumbent firms from competition. ?Creamskimming? should be defined as ?the practice of targeting only the customers that are the least expensive and most profitable for the incumbent firm to serve, thereby undercutting the incumbent firm?s ability to provide service throughout its service area.? Moreover, regulatory approaches to this practice should make clear that creamskimming can take place only where a competitive firm proposes to serve only a portion of an incumbent firm?s service area. In other words, when a competitive entrant proposes to serve an incumbent?s entire service area, creamskimming by definition cannot occur.