IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v23y1999i2p129-145.html
   My bibliography  Save this article

Promoting effective competition through interconnection policy

Author

Listed:
  • Lapuerta, Carlos
  • Tye, William B.

Abstract

Incumbent telephone companies argue for reliance on voluntary negotiations to determine the terms of interconnection, or alternatively for regulated access prices equal to those that an incumbent would accept voluntarily. Such prices are justified as necessary to prevent inefficient entry, based on an economic theory called the 'parity principle'. This paper shows that the parity principle is largely inappropriate for setting interconnection prices in most current contexts, and that the claimed efficiency properties of the rule are often based on flawed, static analyses. Under dynamic considerations the parity principle can threaten the development of effective competition. The authors analyse examples where the parity principle has been advocated in the United States and New Zealand, explaining that interconnection charges are best set by legal or regulatory authority based on the costs of providing network access.

Suggested Citation

  • Lapuerta, Carlos & Tye, William B., 1999. "Promoting effective competition through interconnection policy," Telecommunications Policy, Elsevier, vol. 23(2), pages 129-145, March.
    • Handle: RePEc:eee:telpol:v:23:y:1999:i:2:p:129-145
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596198000834
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joan Calzada & Anton Costas, 2013. "“La liberalización de las telecomunicaciones en España: control de la inflación y universalización del servicio”," IREA Working Papers 201310, University of Barcelona, Research Institute of Applied Economics, revised May 2013.
    2. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
    3. 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.
    4. Thomas A. Horan & Benjamin L. Schooley, 2004. "Market Dynamics and Local Policy Choices for Converged Systems: Case Study of Integrated Telecommunication Design and Deployment," Information Systems Frontiers, Springer, vol. 6(3), pages 205-218, September.
    5. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
    6. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 27, pages 1557-1700, Elsevier.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:telpol:v:23:y:1999:i:2:p:129-145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.