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

Research output: Contribution to journalArticle

40 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

Fingerprint

Telecommunication network
Pricing
Operator
Charge
Equilibrium pricing
Two-part tariff
Access charge
Large firms
Market share
Costs
Competitors
Mobile telephony

Keywords

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

Cite this

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title = "On-net and off-net pricing on asymmetric telecommunications networks",
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.",
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On-net and off-net pricing on asymmetric telecommunications networks. / Hoernig, Steffen.

In: Information Economics And Policy, Vol. 19, No. 2, 01.01.2007, p. 171-188.

Research output: Contribution to journalArticle

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