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Access Charges in the Presence of Call Externalities

Author

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  • Berger Ulrich

    () (Vienna University of Economics)

Abstract

We introduce call externalities in the standard model of network competition with termination-based price discrimination under a CPP regime, 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 may be used as a collusion device, while off-net calls are priced above on-net calls in equilibrium. Moreover, it turns out that "bill and keep" arrangements may be welfare improving compared with cost based access pricing.

Suggested Citation

  • Berger Ulrich, 2005. "Access Charges in the Presence of Call Externalities," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-18, January.
  • Handle: RePEc:bpj:bejeap:v:contributions.3:y:2005:i:1:n:21
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    Citations

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    Cited by:

    1. Hoernig, Steffen, 2007. "On-net and off-net pricing on asymmetric telecommunications networks," Information Economics and Policy, Elsevier, vol. 19(2), pages 171-188, June.
    2. Berger, Ulrich, 2005. "Bill-and-keep vs. cost-based access pricing revisited," Economics Letters, Elsevier, vol. 86(1), pages 107-112, January.
    3. Jullien, Bruno & Rey, Patrick & Sand-Zantman, Wilfried, 2013. "Termination fees revisited," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 738-750.
    4. Mark Armstrong & Julian Wright, 2009. "Mobile Call Termination," Economic Journal, Royal Economic Society, vol. 119(538), pages 270-307, June.
    5. repec:lmu:msmdpa:12688 is not listed on IDEAS
    6. Claudio Agostini & Raul Lazcano & Eduardo Saavedra & Manuel Willington, 2016. "Price Differentiation between On-Net and Off-Net Calls: An Application to the Chilean Telephony Market," Working Papers wp_051, Adolfo Ibáñez University, School of Government.
    7. Jonathan Sandbach & Luke van Hooft, 2010. "Using On-net / Off-net Price Differential to Measure the Size of Call Externalities and its Implications for Setting Efficient Mobile Termination Rates," Chapters,in: Promoting New Telecom Infrastructures, chapter 15 Edward Elgar Publishing.
    8. Sjaak Hurkens & Angel L. Lopez, 2014. "Who should pay for two-way interconnection?," Working Papers 774, Barcelona Graduate School of Economics.
    9. Sjaak Hurkens & Ángel Luis López, 2010. "Mobile Termination and Consumer Expectations under the Receiver-Pays Regime," Working Papers 10-12, NET Institute.
    10. Steffen Hoernig & Marc Bourreau & Carlo Cambini, 2014. "Fixed-mobile integration," Journal of Regulatory Economics, Springer, vol. 45(1), pages 57-74, February.
    11. Hoernig, Steffen, 2014. "Competition between multiple asymmetric networks: Theory and applications," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 57-69.
    12. Luis López, Ángel, 2011. "Mobile termination rates and the receiver-pays regime," Information Economics and Policy, Elsevier, vol. 23(2), pages 171-181, June.
    13. Benjamin E. Hermalin & Michael L. Katz, 2011. "Customer or Complementor? Intercarrier Compensation with Two‐Sided Benefits," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(2), pages 379-408, June.
    14. Harbord, David & Hoernig, Steffen, 2010. "Welfare Analysis of Regulating Mobile Termination Rates in the UK (with an Application to the Orange/T-Mobile Merger)," MPRA Paper 21515, University Library of Munich, Germany.
    15. Ulrich Berger, 2004. "Bill-and-Keep vs. Cost-Based Access Pricing Revisited," Industrial Organization 0408002, EconWPA.
    16. Muck, Johannes, 2016. "Tariff-mediated network effects with incompletely informed consumers," DICE Discussion Papers 210, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    17. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    18. Claudio Agostini & Raul Lazcano & Eduardo Saavedra & Manuel Willington, 2016. "Predation and Network Based Price Discrimination in Chile," Working Papers wp_048, Adolfo Ibáñez University, School of Government.
    19. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-mediated network effects versus strategic discounting: Evidence from German mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 751-759.
    20. Hurkens, Sjaak & López, Ángel L., 2014. "Who Should Pay for Two-way Interconnection?," IESE Research Papers D/1102, IESE Business School.
    21. repec:dau:papers:123456789/79 is not listed on IDEAS
    22. Cambini, Carlo & Valletti, Tommaso, 2005. "Information Exchange and Competition in Communications Networks," CEPR Discussion Papers 5031, C.E.P.R. Discussion Papers.
    23. Harbord, David & Pagnozzi, Marco, 2008. "On-Net/Off-Net Price Discrimination and 'Bill-and-Keep' vs. 'Cost-Based' Regulation of Mobile Termination Rates," MPRA Paper 14540, University Library of Munich, Germany.
    24. repec:lmu:msmdpa:13764 is not listed on IDEAS

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