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Bilateral Market Structures And Regulatory Policies In International Telephone Markets

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  • Heng Ju
  • Guofu Tan

Abstract

We develop models of bilateral oligopoly with traffic exchanges to study the competition and regulatory policies in the international telephone markets. Under the requirement of uniform settlement rates, the proportional return rule (PRR) inflates the rates and hence neutralizes PRR's effect on calling prices. Retail competition and PRR increase net settlement payments. Market efficiency is improved when there are multiple channels for traffic exchanges. Using a panel of 47 countries that exchanged traffic with the United States between 1992 and 2004, we test the effects of bilateral market structures and the U.S. policies. The empirical results support our theoretical findings.

Suggested Citation

  • Heng Ju & Guofu Tan, 2016. "Bilateral Market Structures And Regulatory Policies In International Telephone Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(2), pages 393-424, May.
    • Handle: RePEc:wly:iecrev:v:57:y:2016:i:2:p:393-424
    DOI: 10.1111/iere.12162
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    References listed on IDEAS

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