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A Simple Approach To Network Competition

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  • Chongmin Kim

    () (School of Economics, Kookmin Univesity)

Abstract

This paper develops a simple model of competition among interconnected networks. Access fees are determined either by a regulator or by competition. We show that the price is higher when they compete in both access prices and final tariffs non-cooperatively than when the access fees are regulated. We also show that incentives to collude are higher when access fees are regulated to the level of marginal cost of access services. Thus it is ambiguous to judge the net effect of competition on prices and relevant regulations are necessary to enhance welfare effects.

Suggested Citation

  • Chongmin Kim, 2004. "A Simple Approach To Network Competition," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(2), pages 163-176, December.
  • Handle: RePEc:jed:journl:v:29:y:2004:i:2:p:163-176
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    File URL: http://www.jed.or.kr/full-text/29-2/Chongmin.pdf
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    References listed on IDEAS

    as
    1. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Network Competition; Access Pricing; Tacit Collusion;

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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