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Network Asymmetries and Access Pricing in Cellular Telecommunications

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  • Viktória Kocsis

    (Corvinus University of Budapest)

Abstract

Network shares and retail prices are not symmetric in the telecommunications market with multiple bottlenecks which give rise to new questions of access fee regulation. In this paper we consider a model with two types of asymmetry arising from different entry timing, i.e. a larger reputation for the incumbent and lower cost of servicing for the entrant as a result of more advanced technology. As a result firms have divergent preferences over the access fee. In case of linear and non-linear prices the access fee might still act as the instrument of collusion, but only if a side-payment is permitted which is generally welfare decreasing. Moreover, in contrast with the European regulatory framework, the access fee on the basis of termination cost might not necessarily be a socially preferable solution.

Suggested Citation

  • Viktória Kocsis, 2005. "Network Asymmetries and Access Pricing in Cellular Telecommunications," Tinbergen Institute Discussion Papers 05-085/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20050085
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    References listed on IDEAS

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    Cited by:

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    3. Csoka, Peter & Herings, P. Jean-Jacques & Koczy, Laszlo A., 2007. "Coherent measures of risk from a general equilibrium perspective," Journal of Banking & Finance, Elsevier, vol. 31(8), pages 2517-2534, August.
    4. András Simonovits, 2006. "Social Security Reform in the US: Lessons from Hungary," CERS-IE WORKING PAPERS 0602, Institute of Economics, Centre for Economic and Regional Studies, revised 24 Apr 2006.

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    More about this item

    Keywords

    cost asymmetry; brand loyalty; imperfect competition; network interconnection; access fee;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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