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Using 'Bill and Keep' Interconnect Arrangements to Soften Network Competiti on

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Author Info
Gans, J.S.
King, S.P.

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Abstract

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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File URL: http://www.economics.unimelb.edu.au/SITE/research/workingpapers/wp00_01/739.pdf
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Publisher Info
Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 739.

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Length: 12 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:mlb:wpaper:739

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Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
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Web page: http://www.economics.unimelb.edu.au
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Related research
Keywords: MONOPOLIES TELECOMMUNICATIONS COMPETITION

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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

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: II. Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 38-56, Spring. [Downloadable!] (restricted)
  2. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring. [Downloadable!] (restricted)
  3. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer, vol. 14(1), pages 1-25, February. [Downloadable!] (restricted)
  4. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nicholas Economides, 2006. "Public Policy in Network Industries," Working Papers 06-01, NET Institute, revised Sep 2006. [Downloadable!]
    Other versions:
  2. Joan Calzada & Francesc Trillas, 2005. "The interconnection prices in telecomunications: from theory to practice," Hacienda Pública Española, IEF, vol. 173(2), pages 85-125, June. [Downloadable!]
  3. Ulrich Berger, 2003. "Two-way interconnection and the collusive role of the access charge," Industrial Organization 0303011, EconWPA. [Downloadable!]
  4. Hoernig, Steffen, 2006. "On-Net and Off-Net Pricing on Asymmetric Telecommunications Networks," CEPR Discussion Papers 5588, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Doh-Shin Jeon & Sjaak Hurkens, 2007. "A Retail Benchmarking Approach to Efficient Two-way Access Pricing: Two-Part Tariffs," Working Papers 07-11, NET Institute, revised Sep 2007. [Downloadable!]
  6. Baranes, E. & Flochel, L., 2003. "Competition and mergers in networks with call externalities," Cahiers du LASER (LASER Working Papers) 2003.07, LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1. [Downloadable!]
  7. Kaisa Kotakorpi, 2002. "Access Pricing and Competition in Telecommunications," VATT Discussion Papers 283, Government Institute for Economic Research (VATT). [Downloadable!]
  8. Stennek, Johan & Tangerås, Thomas P., 2007. "Competition vs. Regulation in Mobile Telecommunications," CEPR Discussion Papers 6073, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. LAFFONT, Jean-Jacques & MARCUS, Scott & REY, Patrick & TIROLE, Jean, 2001. "Internet Interconnection and the Off-Net-Cost Pricing Principle," IDEI Working Papers 130, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
    Other versions:
  10. Felix Hoeffler, 2006. "Mobile termination and collusion, revisited," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_16, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  11. 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. [Downloadable!]
    Other versions:
  12. Huang, Ching-I, 2007. "Estimating Demand for Cellular Phone Service under Nonlinear Pricing," MPRA Paper 6459, University Library of Munich, Germany. [Downloadable!]
  13. Pio Baake & Kay Mitusch, 2005. "Mobile Phone Termination Charges with Asymmetric Regulation," Discussion Papers of DIW Berlin 500, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  14. Ulrich Berger, 2004. "Bill-and-Keep vs. Cost-Based Access Pricing Revisited," Industrial Organization 0408002, EconWPA. [Downloadable!]
  15. Ulrich Berger, 2005. "Access Charges in the Presence of Call Externalities," Contributions to Economic Analysis & Policy, Berkeley Electronic Press, vol. 3(1), pages 1334-1334. [Downloadable!] (restricted)
  16. Ulrich Berger, 2004. "Access Charges in the Presence of Call Externalities," Industrial Organization 0408009, EconWPA, revised 31 Aug 2004. [Downloadable!]
  17. David Gilo & Yossi Spiegel, 2003. "Network Interconnection With Competitive Transit," Working Papers 03-05, NET Institute, revised Dec 2003. [Downloadable!]
  18. Stefan Behringer, 2006. "Asymmetric Equilibria and Non-cooperative Access Pricing in Telecommunications," JEPS Working Papers 06-005, JEPS. [Downloadable!]
  19. Cambini, Carlo & Valletti, Tommaso, 2005. "Information Exchange and Competition in Communications Networks," CEPR Discussion Papers 5031, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  20. Cambini, Carlo & Valletti, Tommaso, 2003. "Investments and Network Competition," CEPR Discussion Papers 3829, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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