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Ramsey pricing in one-way and two-way interconnection between telephone networks

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  • Seonghoon Jeon

    (Sogang University)

Abstract

I derive Ramsey optimal prices in one-way access of long-distance operators and enhanced service providers to local loops. As long-distance services and enhanced services become substitutes due to the advance of Internet telephony, the Ramsey principle requires higher access charges assessed on both services. I also derive Ramsey prices in two-way interconnection between fixed-link and mobile phone networks, which turn out to be formally equivalent to those for the one-way access above. This result suggests that the price of fixed-to-mobile calls should be higher than the price of mobile-to-fixed calls when the substitutability of calls to double subscribers is more prominent than the substitutability of calls of double subscribers, and vice versa.

Suggested Citation

  • Seonghoon Jeon, 2002. "Ramsey pricing in one-way and two-way interconnection between telephone networks," Economics Bulletin, AccessEcon, vol. 12(3), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-02l50001
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    References listed on IDEAS

    as
    1. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Creating Competition through Interconnection: Theory and Practice," Journal of Regulatory Economics, Springer, vol. 10(3), pages 227-256, November.
    2. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, April.
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    Cited by:

    1. Joan Calzada & Francesc Trillas, 2005. "The interconnection prices in telecomunications: from theory to practice," Hacienda Pública Española / Review of Public Economics, IEF, vol. 173(2), pages 85-125, June.
    2. de Bijl, P.W.J. & Brunekreeft, G. & van Damme, E.E.C. & Larouche, P. & Shelkoplyas, N. & Sorana, V., 2004. "Interconnected Networks," Other publications TiSEM 10a647e2-6c24-4b98-8005-e, Tilburg University, School of Economics and Management.
      • de Bijl, P.W.J. & Brunekreeft, G. & van Damme, E.E.C. & Larouche, P. & Shelkoplyas, N. & Sorana, V., 2005. "Interconnected Networks," Discussion Paper 2005-007, Tilburg University, Tilburg Law and Economic Center.
      • de Bijl, P.W.J. & Brunekreeft, G. & van Damme, E.E.C. & Larouche, P. & Shelkoplyas, N. & Sorana, V., 2005. "Interconnected Networks," Other publications TiSEM 2fe44772-cc8d-4be2-aff4-3, Tilburg University, School of Economics and Management.

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    More about this item

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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