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Price structures in the market for long-distance voice telephony in Germany

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  • Brunekreeft, Gert
  • Gross, Wolfgang

Abstract

This paper analyses price structures in the liberalized German market for long-distance telecommunications services. Theoretically deduced patterns are backed-up by empirical observations. The market is exceptionally competitive; entry is taking place on a large scale and prices are falling sharply. The product is strongly homogeneous and search costs are extremely low. Propositions included in the assessment concern the necessary absence of systematic price discrimination, the probability of cut-throat competition, and the necessary presence of a demand-compatible peak-load structure. With respect to the latter there is an observable move of the price structure, which can be explained by regulatory failure.

Suggested Citation

  • Brunekreeft, Gert & Gross, Wolfgang, 1999. "Price structures in the market for long-distance voice telephony in Germany," Discussion Papers 61, University of Freiburg, Institute for Transport Economics and Regional Policy.
    • Handle: RePEc:zbw:aluivr:61
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    References listed on IDEAS

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    1. Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654, Elsevier.
    2. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    3. Phlips,Louis, 1983. "The Economics of Price Discrimination," Cambridge Books, Cambridge University Press, number 9780521283946, October.
    4. Lawrence H. Officer, 1966. "The Optimality of Pure Competition in the Capacity Problem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(4), pages 647-651.
    5. Peter O. Steiner, 1957. "Peak Loads and Efficient Pricing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 71(4), pages 585-610.
    6. Ekelund, Robert B, Jr & Hulett, Joe R, 1973. "Joint Supply, the Taussig-Pigou Controversy, and the Competitive Provision of Public Goods," Journal of Law and Economics, University of Chicago Press, vol. 16(2), pages 369-387, October.
    7. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
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    Cited by:

    1. Hehenkamp, Burkhard, 2002. "Sluggish Consumers: An Evolutionary Solution to the Bertrand Paradox," Games and Economic Behavior, Elsevier, vol. 40(1), pages 44-76, July.

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    More about this item

    Keywords

    telecommunications; price discrimination; peak-load pricing;
    All these keywords.

    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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