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On the Impact of "Callback" Competition on International Telephony

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  • Manenti, Fabio M

Abstract

In this paper we build a simple three-country model to evaluate the impact of "callback" on international telephony. The effects on both accounting rates and collection prices are studied. Callback firms exploit arbitrage opportunities in collection prices among countries, rerouting calls that originate in countries with high prices for international phone calls via countries with low prices. Contrary to what is commonly perceived, we show that callback tends to magnify the distortions associated with the current accounting rate regime. In particular, callback puts upward pressure on low price countries' accounting rates and on collection charges. Callback companies are assumed to enjoy a volume price discount on each rerouted call; we show that the larger the price discount offered to callback companies, the higher the prices for international calls in the country hosting callback. Copyright 2001 by Kluwer Academic Publishers

Suggested Citation

  • Manenti, Fabio M, 2001. "On the Impact of "Callback" Competition on International Telephony," Journal of Regulatory Economics, Springer, vol. 20(1), pages 21-41, July.
    • Handle: RePEc:kap:regeco:v:20:y:2001:i:1:p:21-41
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    References listed on IDEAS

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    1. Oecd, 1997. "New Technologies and their Impact on the Accounting Rate System," OECD Digital Economy Papers 28, OECD Publishing.
    2. Frieden, Robert M, 0. "The impact of call-back and arbitrage on the accounting rate regime," Telecommunications Policy, Elsevier, vol. 21(9-10), pages 819-827, November.
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    Cited by:

    1. Sergio Da Silva & Gustavo Manfrim, 2007. "Estimating demand elasticities of fixed telephony in Brazil," Economics Bulletin, AccessEcon, vol. 12(5), pages 1-9.
    2. repec:ebl:ecbull:v:12:y:2007:i:5:p:1-9 is not listed on IDEAS

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    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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