Regulating Termination Charges for Telecommunications Networks

Joshua Gans and Stephen King

Australian Journal of Management, 2002, vol. 27, issue 1, 75-86

Abstract: This paper considers the effects of regulating termination for interconnected, but otherwise unregulated, telecommunications networks. We develop two models, the first that involves fixed market shares and the second, based on the work of Laffont, Rey and Tirole (1998a), which allows for subscriber competition. We show that if a dominant network (i.e. one with the greatest market share) has its termination charges regulated then this will tend to lower the average price of calls. It is also likely to lead to other networks raising their termination charges. If market shares are fixed, then extending termination regulation to non-dominant networks lowers call prices and is unambiguously welfare improving. However, if networks actively compete for subscribers then extending termination charge regulation to a non-dominant network may lead to higher call prices. This is most likely if the non-dominant network has a very low market share relative to the dominant network.

Keywords: TELECOMMUNICATIONS; INTERCONNECTION; NETWORK COMPETITION; DOMINANT FIRM; PRICE REGULATION (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/031289620202700104 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:27:y:2002:i:1:p:75-86

DOI: 10.1177/031289620202700104

Access Statistics for this article

More articles in Australian Journal of Management from Australian School of Business
Bibliographic data for series maintained by SAGE Publications ().