We aim to clarify the role of access charges under two-way network competition, employing a reduced-form approach. Retaining the key features of specific network competition models but imposing less structure, we analyze the impact of changes in access charges on linear and non-linear retail prices. We derive su.cient conditions for usage fees to be increasing (and subscriber charges to be decreasing) in access charges. These conditions are shown to be satisfied only under rather restrictive assumptions on the demand for calls, suggesting that implementing collusion by inflating access charges is likely to be nonfeasible.
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Paper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number
0501.
Length: 24 pages Date of creation: Jan 2005 Date of revision: Publication status: Published in Dewenter, R. und J. Haucap (Eds.), Access Pricing - Theory and Practice, Elsevier. Handle: RePEc:soz:wpaper:0501
Find related papers by JEL classification: D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
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