Access Charges in the Presence of Call Externalities

Ulrich Berger
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Ulrich Berger: Vienna University of Economics

Industrial Organization from University Library of Munich, Germany

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)
Pages: 19 pages
Date: 2004-08-31, Revised 2004-08-31
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Note: Type of Document - pdf; pages: 19
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0408009

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