Price discrimination under nonuniform calling circles and call externalities

R Clavijo ()

No 20054, Documentos de Trabajo from Universidad del Rosario

Abstract: This work develops a competition model between two asymmetrical networks with calling circles, allowing subscribers to derive utility by receiving calls. Unlike the traditional literature predictions, in equilibrium firms have strategies to set off-net price below on-net price. In markets where consumers display strongly concentrated calling patterns, firms can only extract limited surplus from off-net calls. This is reinforced if consumers display weak call externalities, languishing the price strategies to discourage off-net calls. Furthermore, regulating price differential of the large firm can lead consumers to face higher fees compared to discriminatory setting. Therefore, regulators should broaden efforts to measure call externalities and calling circles strength before making decisions on retail tariff regulation.

Keywords: Calling circles; Call externalities; Network competition; Price differentials. (search for similar items in EconPapers)
JEL-codes: D43 D62 L14 (search for similar items in EconPapers)
Pages: 43
Date: 2022-04-08
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind, nep-mic, nep-ore and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:col:000092:020054

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