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Going beyond Duopoly: Connectivity Breakdowns under Receiving Party Pays

Steffen Hoernig ()

FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia

Abstract: We show that the prediction of strategic connectivity breakdowns under a receiving-party-pays system and discrimination between on and off-net prices does not hold up once more than two mobile networks are considered. Indeed, if there are at least three competing networks and enough utility is obtained from receiving calls, only equilibria with finite call prices and receiving prices exist. Private negotiations over access charges then achieve the efficient outcome. Bill & keep (zero access charges) and free outgoing and incoming calls are efficient if and only marginal costs of calls are zero. JEL codes: L13, L51

Keywords: Mobile network competition; Receiving party pays; Connectivity breakdown; Termination rates (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014
New Economics Papers: this item is included in nep-com, nep-ind and nep-net
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Journal Article: Going beyond duopoly: Connectivity breakdowns under receiving party pays (2016) Downloads
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