Access Pricing under Competition: An Application to Cellular Networks

Julian Wright

Journal of Industrial Economics, 2002, vol. 50, issue 3, 289-315

Abstract: A new class of access pricing problems is analyzed in which upstream firms compete for customers and access to these customers is required by downstream markets. Using fixed–to–cellular calls as an example, a model is presented which shows that the determination of cellular termination charges is quite different to standard access pricing problems. Competition between cellular firms leads to access prices being set either at, or above, the monopoly level. Applications are given for other market settings, including the termination of long–distance calls on competing local exchange networks and the setting of interchange fees in payment systems.

Date: 2002
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