Ramsey pricing in one-way and two-way interconnection between telephone networks

Seonghoon Jeon ()
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Seonghoon Jeon: Sogang University

Economics Bulletin, 2002, vol. 12, issue 3, 1-9

Abstract: I derive Ramsey optimal prices in one-way access of long-distance operators and enhanced service providers to local loops. As long-distance services and enhanced services become substitutes due to the advance of Internet telephony, the Ramsey principle requires higher access charges assessed on both services. I also derive Ramsey prices in two-way interconnection between fixed-link and mobile phone networks, which turn out to be formally equivalent to those for the one-way access above. This result suggests that the price of fixed-to-mobile calls should be higher than the price of mobile-to-fixed calls when the substitutability of calls to double subscribers is more prominent than the substitutability of calls of double subscribers, and vice versa.

JEL-codes: L5 L9 (search for similar items in EconPapers)
Date: 2002-02-20
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Citations: View citations in EconPapers (4)

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