A simple access pricing rule to achieve the Ramsey outcome for interconnected networks
AbstractThis paper considers a general and informationally efficient approach to determine the optimal access pricing rule for interconnected networks. It shows that there exists a simple rule that achieves the Ramsey outcome as the unique equilibrium when networks compete in linear prices without network-based price discrimination. The approach is informationally efficient in the sense that the regulator is required to know only the marginal cost structure, i.e. the marginal cost of making and terminating a call. The approach is general in that access prices can depend not only on the marginal costs but also on the retail prices, which can be observed by consumers and therefore by the regulator as well. In particular, I consider the set of linear access pricing rules which includes any fixed access price, the Efficient Component Pricing Rule (ECPR) and the Modified ECPR as special cases. I show that in this set, there is a unique rule that implements the Ramsey outcome as the unique equilibrium independently of the underlying demand conditions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 808.
Date of creation: Feb 2005
Date of revision: Sep 2005
Contact details of provider:
Web page: http://www.econ.upf.edu/
Networks; Access Pricing; Interconnection; Competition Policy;
Find related papers by JEL classification:
- D4 - Microeconomics - - Market Structure and Pricing
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- 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-2005-09-29 (All new papers)
- NEP-COM-2005-09-29 (Industrial Competition)
- NEP-LAW-2005-09-29 (Law & Economics)
- NEP-NET-2005-09-29 (Network Economics)
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.:
- Gans, J.S. & King, S.P., 2000.
"Mobile Network Competition, Customer Ignorance and Fixed-to-Mobile Call Prices,"
Department of Economics - Working Papers Series, The University of Melbourne
734, The University of Melbourne.
- Gans, Joshua S. & King, Stephen P., 2000. "Mobile network competition, customer ignorance and fixed-to-mobile call prices," Information Economics and Policy, Elsevier, Elsevier, vol. 12(4), pages 301-327, December.
- Doganoglu, Toker & Tauman, Yair, 2002. "Network Competition and Access Charge Rules," Manchester School, University of Manchester, vol. 70(1), pages 16-35, January.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Armstrong, M., 1996. "Network interconnection," Discussion Paper Series In Economics And Econometrics 9625, Economics Division, School of Social Sciences, University of Southampton.
- Doh-Shin Jeon & Jean-Jacques Laffont & Jean Tirole, 2004.
"On the Receiver-Pays Principle,"
RAND Journal of Economics,
The RAND Corporation, vol. 35(1), pages 85-110, Spring.
- Doh Shin Jeon & Jean Jacques Laffont & Jean Tirole, 2001. "On the receiver pays principle," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 561, Department of Economics and Business, Universitat Pompeu Fabra.
- Doh-Shin Jeon & Sjaak Hurkens, 2007.
"A Retail Benchmarking Approach to Eficient Two-Way Access Pricing,"
UFAE and IAE Working Papers, Unitat de Fonaments de l'AnÃ lisi EconÃ²mica (UAB) and Institut d'AnÃ lisi EconÃ²mica (CSIC)
717.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Doh-Shin Jeon & Sjaak Hurkens, 2007. "A Retail Benchmarking Approach to Efficient Two-Way Access Pricing," Working Papers 324, Barcelona Graduate School of Economics.
- Doh-Shin Jeon & Sjaak Hurkens, 2007. "A retail benchmarking approach to efficient two-way access pricing," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1055, Department of Economics and Business, Universitat Pompeu Fabra.
- Stennek, Johan & Tangerås, Thomas, 2006.
"Competition vs. Regulation in Mobile Telecommunications,"
Working Paper Series, Research Institute of Industrial Economics
685, Research Institute of Industrial Economics.
- Johan Stennek & Thomas Tangeras, 2008. "Competition vs. Regulation in Mobile Telecommunications," Working Papers, NET Institute 08-09, NET Institute.
- Stennek, Johan & Tangerås, Thomas P., 2007. "Competition vs. Regulation in Mobile Telecommunications," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6073, C.E.P.R. Discussion Papers.
- Doh-Shin Jeon & Sjaak Hurkens, 2007. "A Retail Benchmarking Approach to Efficient Two-way Access Pricing: Two-Part Tariffs," Working Papers, NET Institute 07-11, NET Institute, revised Sep 2007.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.