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Using 'bill and keep' interconnect arrangements to soften network competition

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  • Gans, Joshua S.
  • King, Stephen P.

Abstract

This paper demonstrates that low (below marginal cost) interconnect or access charges can be used to sustain high subscription prices in an environment of network competition with two-part tariffs and price discrimination. This result stands in contrast to other results in the literature suggesting that high interconnect charges can play a collusive role.

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File URL: http://www.sciencedirect.com/science/article/B6V84-42VV88K-M/2/2595b35cb76e7d4aecae34bc2126aedf
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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 71 (2001)
Issue (Month): 3 (June)
Pages: 413-420

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Handle: RePEc:eee:ecolet:v:71:y:2001:i:3:p:413-420

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Web page: http://www.elsevier.com/locate/ecolet

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  1. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
  2. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer, vol. 14(1), pages 1-25, February.
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