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Going beyond duopoly: Connectivity breakdowns under receiving party pays

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  • Hoernig, Steffen

Abstract

We show that the prediction of strategic connectivity breakdowns under a receiving-party-pays system and discrimination between on- and off-net prices does not hold up once more than two mobile networks are considered. Indeed, if there are at least three competing networks and enough utility is obtained from receiving calls, no strategic connectivity breakdowns occur. Private negotiations over access charges then achieve the efficient outcome. Bill & keep (zero access charges) and free outgoing and incoming calls are efficient if and only marginal costs of calls are zero.

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  • Hoernig, Steffen, 2016. "Going beyond duopoly: Connectivity breakdowns under receiving party pays," Information Economics and Policy, Elsevier, vol. 36(C), pages 1-9.
    • Handle: RePEc:eee:iepoli:v:36:y:2016:i:c:p:1-9
    DOI: 10.1016/j.infoecopol.2016.06.003
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    Cited by:

    1. Hurkens, Sjaak & López, Ángel L., 2021. "Mobile termination rates and retail regimes in Europe and the US: A unified theory of CPP and RPP," Information Economics and Policy, Elsevier, vol. 56(C).

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    More about this item

    Keywords

    Mobile network competition; Receiving party pays; Connectivity breakdown; Termination rates;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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