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Pricing Regulation Under Bypass Competition

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  • Nicolas Curien
  • Bruno Jullien
  • Patrick Rey

Abstract

We analyze optimal pricing policies in local telecommunications subject to bypass for the access of long-distance carriers. We first consider the case of a regulated monopoly that operates the local network and has access to an additional technology (bypass) more efficient for large customers. We then study how competition in bypass affects the optimal nonlinear pricing policy and the resulting allocation. When transfers are allowed between the regulator and the network operator, bypass competition benefits consumers at the expense of the taxpayer, otherwise it benefits large consumers but hurts small ones.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 29 (1998)
Issue (Month): 2 (Summer)
Pages: 259-279

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Handle: RePEc:rje:randje:v:29:y:1998:i:summer:p:259-279

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Cited by:
  1. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 44(2), pages 325-366, June.
  2. Inderst, Roman, 2004. "Contractual distortions in a market with frictions," Journal of Economic Theory, Elsevier, Elsevier, vol. 116(1), pages 155-176, May.
  3. Lewis, Tracy R. & Sappington, David E. M., 1999. "Access pricing with unregulated downstream competition," Information Economics and Policy, Elsevier, Elsevier, vol. 11(1), pages 73-100, March.

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