Network Asymmetries and Access Pricing in Cellular Telecommunications

Viktoria Kocsis ()
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Viktoria Kocsis: Corvinus University of Budapest and Tinbergen Institute (Amsterdam)

No 513, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: Network shares and retail prices are not symmetric in the telecommunications market with multiple bottlenecks which give rise to new questions of access fee regulation. In this paper we consider a model with two types of asymmetry arising from different entry timing, i.e. a larger reputation for the incumbent and lower cost of servicing for the entrant as a result of more advanced technology. As a result firms have divergent preferences over the access fee. In case of linear and non-linear prices the access fee might still act as the instrument of collusion, but only if a side-payment is permitted which is generally welfare decreasing. Moreover, in contrast with the European regulatory framework, the access fee on the basis of termination cost might not necessarily be a socially preferable solution.

Keywords: cost asymmetry; brand loyalty; imperfect competition; network interconnection; access fee (search for similar items in EconPapers)
JEL-codes: L11 L13 L51 L96 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2005-11
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