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Bargaining over Interconnection: The Clear‐Telecom Dispute

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  • MICHAEL CARTER
  • JULIAN WRIGHT

Abstract

We explore the problem of network interconnection in local telecommunications. We develop a model with a competitive business sector and a regulated residential sector. The model is used to analyze the celebrated New Zealand antitrust case between Clear and Telecom. We discuss implications of the model for the economics of antitrust, including issues of competition versus efficiency and the use of appropriate economic models. We also examine the implications of some proposed rules for interconnection. In particular, we examine reciprocity, ‘bill and keep’, and the rule that the courts ultimately endorsed, the Baumol‐Willig rule.

Suggested Citation

  • Michael Carter & Julian Wright, 1999. "Bargaining over Interconnection: The Clear‐Telecom Dispute," The Economic Record, The Economic Society of Australia, vol. 75(3), pages 241-255, September.
    • Handle: RePEc:bla:ecorec:v:75:y:1999:i:3:p:241-255
    DOI: 10.1111/j.1475-4932.1999.tb02453.x
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
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    4. David Boles De Boer & Lewis Evans, 1996. "The Economic Efficiency of Telecommunications in a Deregulated Market: The case of New Zealand," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 24-35, March.
    5. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-564, May.
    6. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 1-25, February.
    7. Wright, Julian, 1999. "International Telecommunications, Settlement Rates, and the FCC," Journal of Regulatory Economics, Springer, vol. 15(3), pages 267-291, May.
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    Cited by:

    1. Kim Soo Jin, 2020. "Direct Interconnection and Investment Incentives for Content Quality," Review of Network Economics, De Gruyter, vol. 18(3), pages 169-204, September.

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