Nonlinear pricing of telecommunications with call and network externalities
AbstractThis paper investigates how call and network externalities affect a monopolistâs optimal nonlinear pricing of a two-way telecommunication service. The existence of call externalities results in all types of subscribers (even the highest type) making suboptimal quantities of calls in the optimum. This is because the firm being not allowed to charge incoming calls cannot control the quantities of incoming calls. Due to call externalities, there may exist some subscribers who only receive calls without making any outgoing calls in equilibrium. Also, the firm may have incentives to subsidise some low-type consumers in order to take advantage of network effects.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 21 (2003)
Issue (Month): 7 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505551
Other versions of this item:
- Jong-Hee Hahn, 2000. "Nonlinear Pricing of Telecommunications with Call and Network Externalities," Keele Department of Economics Discussion Papers (1995-2001) 2000/15, Department of Economics, Keele University, revised Nov 2001.
- Cro - Mathematical and Quantitative Methods - - - - -
- JEL - Labor and Demographic Economics - - - - -
- cla - - - - - -
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicholas Economides & Giuseppe Lopomo & Glenn Woroch, 1997.
"Strategic Commitments and the Principle of Reciprocity in Interconnection Pricing,"
- Nicholas Economides & Giuseppe Lopomo & Glenn Woroch, 2005. "Strategic Commitments and the Principle of Reciprocity in Interconnection Pricing," Working Papers 05-10, New York University, Leonard N. Stern School of Business, Department of Economics.
- Shmuel S. Oren & Stephen A. Smith & Robert B. Wilson, 1982. "Nonlinear Pricing in Markets with Interdependent Demand," Marketing Science, INFORMS, vol. 1(3), pages 287-313.
- Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
- Doh Shin Jeon & Jean Jacques Laffont & Jean Tirole, 2001.
"On the receiver pays principle,"
Economics Working Papers
561, Department of Economics and Business, Universitat Pompeu Fabra.
- Nicholas Economides, 1995.
"The Economics of Networks,"
94-24, New York University, Leonard N. Stern School of Business, Department of Economics, revised Sep 1995.
- Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
- Economides, Nicholas, 1996. "The economics of networks," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 673-699, October.
- Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
- Dybvig, Philip H. & Spatt, Chester S., 1983. "Adoption externalities as public goods," Journal of Public Economics, Elsevier, vol. 20(2), pages 231-247, March.
- Nicholas Economides & Giuseppe Lopomo & Glenn Woroch, 1997. "Regulatory Pricing Policies to Neutralize Network Dominance," Industrial Organization 9612003, EconWPA.
- Hahn, Jong-Hee, 2004.
"Network competition and interconnection with heterogeneous subscribers,"
International Journal of Industrial Organization,
Elsevier, vol. 22(5), pages 611-631, May.
- Jong-Hee Hahn, 2000. "Network Competition and Interconnection with Heterogeneous Subscribers," Keele Department of Economics Discussion Papers (1995-2001) 2000/11, Department of Economics, Keele University.
- Gergely Csorba, 2004.
"Screening Contracts in the Presence of Positive Network Effects,"
Econometric Society 2004 North American Summer Meetings
336, Econometric Society.
- Csorba, Gergely, 2008. "Screening contracts in the presence of positive network effects," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 213-226, January.
- Gergely Csorba, 2004. "Screening Contracts in the Presence of Positive Network Effects," IEHAS Discussion Papers 0414, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- Edmond Baranes & Laurent Flochel, 2008. "Competition in telecommunication networks with call externalities," Journal of Regulatory Economics, Springer, vol. 34(1), pages 53-74, August.
- Ulrich Berger, 2004. "Bill-and-Keep vs. Cost-Based Access Pricing Revisited," Industrial Organization 0408002, EconWPA.
- Gergely Csorba & Jong-Hee Hahn, 2006. "FUNCTIONAL DEGRADATION AND ASYMMETRIC NETWORK EFFECTS -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 54(2), pages 253-268, 06.
- Joan Calzada & Francesc Trillas, 2005. "The interconnection prices in telecomunications: from theory to practice," Hacienda Pública Española, IEF, vol. 173(2), pages 85-125, June.
- Meng, Dawen & Tian, Guoqiang, 2008. "Nonlinear Pricing with Network Externalities and Countervailing Incentives," MPRA Paper 41212, University Library of Munich, Germany, revised Aug 2008.
- Ulrich Berger, 2004. "Access Charges in the Presence of Call Externalities," Industrial Organization 0408009, EconWPA, revised 31 Aug 2004.
- Khaïreddine Jebsi & Lionel Thomas, 2005. "Nonlinear pricing of a congestible network good," Economics Bulletin, AccessEcon, vol. 4(2), pages 1-7.
- Luis López, Ángel, 2011. "Mobile termination rates and the receiver-pays regime," Information Economics and Policy, Elsevier, vol. 23(2), pages 171-181, June.
- Berger, Ulrich, 2005. "Bill-and-keep vs. cost-based access pricing revisited," Economics Letters, Elsevier, vol. 86(1), pages 107-112, January.
- Harbord, David & Pagnozzi, Marco, 2008. "On-Net/Off-Net Price Discrimination and 'Bill-and-Keep' vs. 'Cost-Based' Regulation of Mobile Termination Rates," MPRA Paper 14540, University Library of Munich, Germany.
- Batarce, Marco & Ivaldi, Marc, 2010. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," TSE Working Papers 10-226, Toulouse School of Economics (TSE), revised Apr 2011.
- repec:ebl:ecbull:v:4:y:2005:i:2:p:1-7 is not listed on IDEAS
- MacDonald, Ian A. & Meriluoto, Laura, 2005. "Efficient usage and access pricing in telephone networks," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 615-623, September.
- Batarce, Marco & Ivaldi, Marc, 2011. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," CEPR Discussion Papers 8416, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If references are entirely missing, you can add them using this form.