Foreclosing competition through access charges and price discrimination

Angel L. Lopez () and Patrick Rey
Additional contact information
Angel L. Lopez: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN

No D/801, IESE Research Papers from IESE Business School

Abstract: This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non-linear tariffs and may charge different prices for on-net and off-net calls. Departing from cost-based access pricing allows the incumbent to foreclose the market in a profitable way. If the incumbent benefits from customer inertia, then it has an incentive to insist on the highest possible access markup even if access charges are reciprocal and even in the absence of actual switching costs. If instead the entrant benefits from customer activism, then foreclosure is profitable only when switching costs are large enough.

Keywords: Networks; benefits; costs; customer (search for similar items in EconPapers)
Pages: 43 pages
Date: 2009-07-09
New Economics Papers: this item is included in nep-com, nep-mic and nep-net
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Citations: View citations in EconPapers (18)

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http://www.iese.edu/research/pdfs/DI-0801-E.pdf (application/pdf)

Related works:
Working Paper: Foreclosing Competition through Access Charges and Price Discrimination (2015)
Working Paper: Foreclosing Competition through Access Charges and Price Discrimination (2015)
Working Paper: Foreclosing Competition through Access Charges and Price Discrimination (2009)
Working Paper: Foreclosing Competition through Access Charges and Price Discrimination (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:iesewp:d-0801

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