Calling Circles: Network Competition with Non-Uniform Calling Patterns

Roman Inderst, Tommaso Valletti and Steffen Hoernig

No 8114, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We introduce a flexible model of telecommunications network competition with non-uniform calling patterns, which account for the fact that customers tend to make most calls to a small subset of 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, and the resulting on-net prices are below off-net prices, if calling patterns are sufficiently concentrated.

Keywords: Network competition; Non-uniform calling patterns; Termination charges (search for similar items in EconPapers)
JEL-codes: L13 L51 (search for similar items in EconPapers)
Date: 2010-11
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Calling circles: network competition with nonuniform calling patterns (2014)
Working Paper: Calling Circles: Network Competition with Non-Uniform Calling Patterns (2011)
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