Bill and Keep for Telecom Ngn

Using Bill and Keep Interconnect Arrangements to Soften lucre Competition by Joshua S. Gans and Stephen P. King* University of Melbourne 13th March, 2000 This paper renders that low (below marginal cost) link or access charges croup be used to dumbfound eminent subscription prices under network competition with two-part tariffs and price discrimination. This dissolvent stands in contrast to other results in the literature suggesting that high interconnect charges can play a collusive role. diary of Economic Literature Classification Numbers: L41, L96. Keywords. network competition, interconnection, point and keep, and two part tariffs. * Melbourne Business School and Department of Economics, respectively. each(prenominal) correspondence to Joshua Gans, Email: J.Gans@mbs.unimelb.edu.au; Phone: +61-3-9349-8173; Fax: +61-3-9349-8169. We would like to convey Patrick Rey and Julian Wright for their comments on an earlier version of this paper. Responsibility for all views expressed remains our own. 2 US and European mend in local, fixed-line telecommunications has highlighted the potential for network competition. A key component in competition is the terms that govern interconnection among competing networks.

These pricing arrangements between networks will influence the costs of make inter- and sometimes intra-network calls and hence, the level of effective competition. A number of new-made papers have raised concerns that interconnect fees between competing networks can be used to facilitate collusive outcomes. Laffont, Rey and Tirole (1998a), Armstrong (1998) and Carter and Wright (1999) each demonstrate that, by negotiating high interconnect charges, monopoly outcomes can result condescension the existence of competing networks. Interconnect charges play an important role in the (marginal) cost of calls. Under a caller-pays system, they represent the amount a network that originates a call pays to the network that terminates a call. Consequently, the... If you emergency to get a full essay, order it on our website: Ordercustompaper.com

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