Two-way interconnection and the collusive role of the access charge
AbstractI show that under network competition with termination-based price discrimination access charges below marginal cost may be used as a collusion device, if the utility of receiving calls is accounted for. This holds even for linear prices and sharply contrasts recent results in the literature suggesting that collusion over the access charge might result in a markup on cost. Moreover, "bill and keep" arrangements may be welfare improving compared with cost-based access pricing.
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Bibliographic InfoPaper provided by EconWPA in its series Industrial Organization with number 0303011.
Length: 24 pages
Date of creation: 25 Mar 2003
Date of revision:
Note: Type of Document - pdf-file; pages: 24; figures: included
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Network Competition; Two-Way Interconnection; Access Charge; Call Externality;
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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