Access Charges in the Presence of Call Externalities
AbstractWe introduce call externalities in the standard model of network competition with termination-based price discrimination, and employ a simple graphical analysis to study the outcome of competition. In contrast to recent results in the literature, we find that even under linear pricing, access charges below marginal cost are used as a collusion device, while off-net prices are above on-net prices in equilibrium. 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 0408009.
Length: 19 pages
Date of creation: 31 Aug 2004
Date of revision: 31 Aug 2004
Note: Type of Document - pdf; pages: 19
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Access Charge; Call Externality; Interconnection; Telecommunications;
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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