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The Revenue‐Sharing Rule For Interconnection Charges

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  • JEONG‐YOO KIM
  • YOONSUNG LIM

Abstract

In this paper we explore the economic principle behind the revenue‐sharing rule for interconnection charges. Our main finding is that symmetric firms can collude by splitting the revenues equally. We further characterize the optimal revenue‐sharing ratio and discuss the relationship between optimal ratio and the optimal access price. We also show that the revenue‐sharing rule can have the perverse effect of inducing a firm to raise its own costs in order to gain a higher share of revenues.

Suggested Citation

  • Jeong‐Yoo Kim & Yoonsung Lim, 2004. "The Revenue‐Sharing Rule For Interconnection Charges," The Japanese Economic Review, Japanese Economic Association, vol. 55(3), pages 298-310, September.
    • Handle: RePEc:bla:jecrev:v:55:y:2004:i:3:p:298-310
    DOI: 10.1111/j.1468-5876.2004.00274.x
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    Cited by:

    1. Kim, Jeong-Yoo & Nahm, Jae, 2007. "Reexamining the effect of the most-favored-nation provision in input prices on R and D incentives," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 201-217, February.

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