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A retail benchmarking approach to efficient two-way access pricing: no termination-based price discrimination-super-†

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  • Doh-Shin Jeon
  • Sjaak Hurkens

Abstract

We study access pricing rules that determine the access prices between two networks as a linear function of marginal costs and (average) retail prices set by both networks. When firms compete in linear prices, there is a unique linear rule that implements the Ramsey outcome as the unique equilibrium, independently of underlying demand conditions. When firms compete in two-part tariffs, there exists a class of rules under which firms choose the variable price equal to the marginal cost. Therefore, the regulator can choose among these rules to pursue additional objectives such as increasing consumer surplus or promoting socially optimal investment. Copyright (c) 2008, RAND.

Suggested Citation

  • Doh-Shin Jeon & Sjaak Hurkens, 2008. "A retail benchmarking approach to efficient two-way access pricing: no termination-based price discrimination-super-†," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 822-849.
  • Handle: RePEc:bla:randje:v:39:y:2008:i:3:p:822-849
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    References listed on IDEAS

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    Cited by:

    1. Tilman Klumpp & Xuejuan Su, 2015. "Strategic Investment under Open Access: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 63(3), pages 495-521, September.
    2. Stühmeier, Torben, 2012. "Roaming and investments in the mobile internet market," Telecommunications Policy, Elsevier, vol. 36(8), pages 595-607.
    3. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    4. Hurkens, Sjaak & Jeon, Doh-Shin, 2012. "Promoting network competition by regulating termination charges," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 541-552.

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