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Calling vs Receiving Party Pays: Market Penetration and the Importance of the Call Externality

Author

Listed:
  • Tommaso Majer
  • Michele Pistollato

Abstract

In this paper we study how the access price affects the choice of the tariff regime taken by the network operators. We show that for high values of the access price, that is taken as a parameter by the firms, networks decide to charge only the callers. Otherwise, for low values of the access charge, networks charge also the receivers. Moreover, we compare market penetration and total welfare between the two price regimes. Our model suggests that, for high values of call externality, market penetration and total welfare are larger in Receiving Party Pays regime when the access charge is close to zero.

Suggested Citation

  • Tommaso Majer & Michele Pistollato, 2010. "Calling vs Receiving Party Pays: Market Penetration and the Importance of the Call Externality," UFAE and IAE Working Papers 845.10, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    • Handle: RePEc:aub:autbar:845.10
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    Keywords

    Gender Segregation; Occupational Aspirations; Children; Socialization; Agency; Personality Traits; Mechanisms; British Household Panel Survey;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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