On-Net and Off-Net Pricing on Asymmetric Telecommunications Networks

Steffen Hoernig

No 5588, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The differential between on-net and off-net prices, for example on mobile telephony networks, is an issue that is hotly debated between telecoms operators and regulators. Small operators contend that their competitors' high off-net prices are anticompetitive. We show that if the utility of receiving calls is taken into account, the equilibrium pricing structures will indeed depend on firms' market shares. Larger firms will charge higher off-net prices even without anticompetitive intent, both under linear and two-part tariffs. Predative behavior would be accompanied by even larger on-net / off-net differentials even if access charges are set at cost.

Keywords: Telecommunications network competition; On/off-net pricing; Asymmetry; Call externality (search for similar items in EconPapers)
JEL-codes: L51 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-com, nep-mic and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: On-net and off-net pricing on asymmetric telecommunications networks (2007)
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