Calling circles: network competition with nonuniform calling patterns

Steffen Hoernig, Roman Inderst and Tommaso Valletti

RAND Journal of Economics, 2014, vol. 45, issue 1, 155-175

Abstract: type="main">

We introduce a flexible model of telecommunications network competition with nonuniform calling patterns, accounting for the fact that customers tend to make most calls to a small set of similar people. Equilibrium call prices are distorted away from marginal cost, and competitive intensity is affected by the concentration of calling patterns. Contrary to previous predictions, jointly profit-maximizing access charges are set above termination cost in order to dampen competition if calling patterns are sufficiently concentrated. We discuss implications for regulating access charges as well as on- and off-net price discrimination.

Date: 2014
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Citations: View citations in EconPapers (29)

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Related works:
Working Paper: Calling Circles: Network Competition with Non-Uniform Calling Patterns (2011)
Working Paper: Calling Circles: Network Competition with Non-Uniform Calling Patterns (2010)
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