On-net and off-net pricing on asymmetric telecommunications networks

Research output: Contribution to journalArticle

41 Citations (Scopus)

Abstract

The differential between on-net and off-net prices, for example on mobile telephony networks, is an issue that is hotly debated between telecoms operators and regulators. Small operators contend that their competitors' high off-net prices are anticompetitive. We show that if the utility of receiving calls is taken into account, the equilibrium pricing structures will indeed depend on firms' market shares. Larger firms will charge higher off-net prices even without anticompetitive intent, both under linear and two-part tariffs. Predatory behavior would be accompanied by even larger on-net/off-net differentials even if access charges are set at cost. (C) 2007 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)171-188
JournalInformation Economics And Policy
Volume19
Issue number2
DOIs
Publication statusPublished - 1 Jan 2007

Keywords

  • telecommunications network competition
  • on/off-net pricing
  • asymmetry
  • call externality

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