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A Simple Approach To Network Competition

Author

Listed:
  • Chongmin Kim

    (School of Economics, Kookmin Univesity)

Abstract

This paper develops a simple model of competition among interconnected networks. Access fees are determined either by a regulator or by competition. We show that the price is higher when they compete in both access prices and final tariffs non-cooperatively than when the access fees are regulated. We also show that incentives to collude are higher when access fees are regulated to the level of marginal cost of access services. Thus it is ambiguous to judge the net effect of competition on prices and relevant regulations are necessary to enhance welfare effects.

Suggested Citation

  • Chongmin Kim, 2004. "A Simple Approach To Network Competition," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(2), pages 163-176, December.
    • Handle: RePEc:jed:journl:v:29:y:2004:i:2:p:163-176
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    File URL: http://www.jed.or.kr/full-text/29-2/Chongmin.pdf
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    References listed on IDEAS

    as
    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.
    2. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    3. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Petr Fiala, 2022. "Modelling and analysis of co-opetition in network industries by biform games," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(2), pages 647-665, June.

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    More about this item

    Keywords

    Network Competition; Access Pricing; Tacit Collusion;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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