Access Charges in the Presence of Call Externalities

Ulrich Berger
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Ulrich Berger: Vienna University of Economics

Industrial Organization from EconWPA

Abstract: We introduce call externalities in the standard model of network competition with termination-based price discrimination, and employ a simple graphical analysis to study the outcome of competition. In contrast to recent results in the literature, we find that even under linear pricing, access charges below marginal cost are used as a collusion device, while off-net prices are above on-net prices in equilibrium. Moreover, "bill and keep" arrangements may be welfare improving compared with cost-based access pricing.

Keywords: Access Charge; Call Externality; Interconnection; Telecommunications (search for similar items in EconPapers)
JEL-codes: L41 L96 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
Date: 2004-08-31, Revised 2004-08-31
Note: Type of Document - pdf; pages: 19
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:0408009

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