Network Asymmetries and Access Pricing in Cellular Telecommunications
AbstractNetwork shares and retail prices are not symmetric in the telecommunications market with multiple bottlenecks which give rise to new questions of access fee regulation. In this paper we consider a model with two types of asymmetry arising from different entry timing, i.e. a larger reputation for the incumbent and lower cost of servicing for the entrant as a result of more advanced technology. As a result firms have divergent preferences over the access fee. In case of linear and non-linear prices the access fee might still act as the instrument of collusion, but only if a side-payment is permitted which is generally welfare decreasing. Moreover, in contrast with the European regulatory framework, the access fee on the basis of termination cost might not necessarily be a socially preferable solution.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 05-085/1.
Date of creation: 16 Sep 2005
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cost asymmetry; brand loyalty; imperfect competition; network interconnection; access fee;
Other versions of this item:
- Viktoria Kocsis, 2005. "Network Asymmetries and Access Pricing in Cellular Telecommunications," IEHAS Discussion Papers 0513, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- 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
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-24 (All new papers)
- NEP-COM-2006-01-24 (Industrial Competition)
- NEP-MIC-2006-01-24 (Microeconomics)
- NEP-MKT-2006-01-24 (Marketing)
- NEP-NET-2006-01-24 (Network Economics)
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