This paper demonstrates that low (below marginal cost) interconnect or access charges can be used to sustain high subscription prices in an environment of network competition with two-part tariffs and price discrimination. This result stands in contrast to other results in the literature suggesting that high interconnect charges can play a collusive role.
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Length: 12 pages Date of creation: 2000 Date of revision: Handle: RePEc:mlb:wpaper:739
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Find related papers by JEL classification: L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
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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.
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