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.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 21 (2003)
Issue (Month): 7 (September)
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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 - - - - - -
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