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Access Pricing and Competition in Telecommunications

  • Kaisa Kotakorpi
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    This study reviews the key economic features of the telecommunications industry and outlines two benchmark models that have been developed in previous literature for introducing competition into local telecommunications. One possibility is services based competition, where entrant telephone operators have no network of their own, and another is facilities based competition, where competitors build their own networks. Determining the price for access, that is, the price at which one operator can use the infrastructure of another, plays a central role in ensuring the effectiveness of competition in each case and access price regulation can in many cases increase welfare. In addition to the theoretical discussion, we apply the theories to form an analysis of Finnish policies towards competition and access pricing in the local telecommunications market.

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    Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 283.

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    Date of creation: 08 Nov 2002
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    Handle: RePEc:fer:dpaper:283
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    1. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer, vol. 14(1), pages 1-25, February.
    2. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, June.
    3. Cave, Martin & Donnelly, Mark P., 1996. "The pricing of international telecommunications services by monopoly operators," Information Economics and Policy, Elsevier, vol. 8(2), pages 107-123, June.
    4. Nicholas Economides & Lawrence J. White, 1997. "Access and Interconnection Pricing: How Efficient is the Efficient Component Pricing Rule?," Industrial Organization 9701003, EconWPA.
    5. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-50, June.
    6. Vickers, John, 1997. "Regulation, Competition, and the Structure of Prices," Oxford Review of Economic Policy, Oxford University Press, vol. 13(1), pages 15-26, Spring.
    7. J. Gregory Sidak & William Baumol, 1994. "Toward Competition in Local Telephony," Books, American Enterprise Institute, number 52984, 7.
    8. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, June.
    9. Cave, Martin & Williamson, Peter, 1996. "Entry, Competition, and Regulation in UK Telecommunications," Oxford Review of Economic Policy, Oxford University Press, vol. 12(4), pages 100-121, Winter.
    10. Armstrong, Mark, 1997. "Competition in Telecommunications," Oxford Review of Economic Policy, Oxford University Press, vol. 13(1), pages 64-82, Spring.
    11. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Creating Competition through Interconnection: Theory and Practice," Journal of Regulatory Economics, Springer, vol. 10(3), pages 227-56, November.
    12. J-J. Laffont & J. Tirole, 1994. "Access Pricing and Competition," Working papers 95-11, Massachusetts Institute of Technology (MIT), Department of Economics.
    13. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
    14. Gasmi, Farid & Laffont, Jean-Jacques & Sharkey, William, 1999. "The Natural Monopoly Test Reconsidered: An Engineering Process-Based Approach to Empirical Analysis in Telecommunications," IDEI Working Papers 91, Institut d'Économie Industrielle (IDEI), Toulouse.
    15. Nicholas Economides, 1997. "The Economics of Networks," Industrial Organization 9701002, EconWPA.
    16. Panzar, John C., 1989. "Technological determinants of firm and industry structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 1, pages 3-59 Elsevier.
    17. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
    18. Braeutigam, Ronald R., 1989. "Optimal policies for natural monopolies," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 23, pages 1289-1346 Elsevier.
    19. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
    20. repec:cup:cbooks:9780521314008 is not listed on IDEAS
    21. Laffont, Jean-Jacques & Tirole, Jean, 1990. "The regulation of multiproduct firms : Part I: Theory," Journal of Public Economics, Elsevier, vol. 43(1), pages 1-36, October.
    22. Armstrong, Mark & Vickers, John, 1998. "The Access Pricing Problem with Deregulation: A Note," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 115-21, March.
    23. Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
    24. Wilson, Wesley W. & Zhou, Yimin, 2001. "Telecommunications deregulation and subadditive costs: Are local telephone monopolies unnatural?," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 909-930, May.
    25. Gans, Joshua S. & King, Stephen P., 2001. "Using 'bill and keep' interconnect arrangements to soften network competition," Economics Letters, Elsevier, vol. 71(3), pages 413-420, June.
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