Competition in telecommunication networks with call externalities

Edmond Baranes () and Laurent Flochel
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Edmond Baranes: MRE - Montpellier Recherche en Economie - UM - Université de Montpellier
Laurent Flochel: GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper describes a model involving two interconnected networks offering different degrees of quality. In these networks, there are call externalities enabling consumers to assess the quality of the calls they send and receive. Networks compete in two-part tariffs. Our aim is to show that the "profit neutrality" result no longer applies due to network asymmetry and call externalities. In the case of non reciprocal access charges, call externalities generate private incentives enabling each competitor to charge low access prices. This reduces the risk of tacit collusion as competitors are free to negotiate their access charges.

Keywords: Networks; competition; Call; externalities; Access; price (search for similar items in EconPapers)
Date: 2008-08
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Citations: View citations in EconPapers (1)

Published in Journal of Regulatory Economics, 2008, 34 (1), pp.53 - 74. ⟨10.1007/s11149-007-9055-7⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01830041

DOI: 10.1007/s11149-007-9055-7

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