Access Pricing, Quality Degradation, and Foreclosure in the Internet
AbstractAccess to both a local and a global network is needed in order to get complete connection to the Internet. The purpose of this article is to examine the interplay between those two networks and how it affects the domestic public policy towards a domestic provider of local access. We find that a cost-oriented regulation is detrimental to domestic welfare, because it shifts profit to the foreign provider of global access. The optimal policy is that the regulator commits itself to set an access price above costs, possibly the same price as in an unregulated market economy. A regulation of the global access price has a non-monotonic effect on domestic welfare, and there is a potential conflict between international and domestic regulation policy. Copyright 2002 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Journal of Regulatory Economics.
Volume (Year): 22 (2002)
Issue (Month): 1 (July)
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Web page: http://www.springerlink.com/link.asp?id=100298
Other versions of this item:
- Foros, Oystein & Kind, Hans Jarle & SÃ¸rgard, Lars, 2003. "Access Pricing, Quality Degradation, and Foreclosure in the Internet," University of California at Santa Barbara, Economics Working Paper Series qt62p0k04c, Department of Economics, UC Santa Barbara.
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