Tariff-Mediated Network Externalities: Is Regulatory Intervention Any Good?

No 6866, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Mobile phone networks' practice of charging higher prices for off-net than for on-net calls has been pinpointed as the source of two competition problems: underprovision of calls and permanent disadvantages for small networks. We consider these allegations and four different remedies: limiting on/off-net differentials or off-net margins, lower termination fees, and asymmetric termination fees. In all cases a trade-off has to be made between efficiency and networks' profits on the one hand, and consumer surplus on the other. Indeed, the total welfare effects of regulating on/off-net differentials are ambiguous and depend on demand characteristics.

Keywords: Network competition; on/off-net differentials; retail price controls; termination fees (search for similar items in EconPapers)
JEL-codes: L13 L51 L96 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ict, nep-mic, nep-net and nep-reg
Date: 2008-06

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