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Competition and Access Price Regulation with Multiple Networks

38 Pages Posted: 3 Oct 2010  

Yan Liu

Monash College

Guang-Zhen Sun

Monash University - Department of Economics; Max Planck Institute for Research Into Economic Systems

Date Written: November 11, 2009

Abstract

We develop a framework, extending the conventional duopoly model by replacing the Hotelling line with a simplex in high-dimension spaces, to study the competition and access regulation of multiple networks. We first characterize the competitive equilibrium when the substitutabilities of the networks are not too high, or the access charges are nearly cost-based. We then analyze how the equilibrium market shares respond to marginal variations in the access charges under various regimes of access regulation, and thereby examine the efficiency implications of such regulation regimes. In particular, we analyze the asymmetric scenario in which some networks are incumbent and some are entrants. It is shown that some existing results of the duopoly do not extend to a multi-firm setting, largely because regulation of multiple networks is structurally far richer.

Keywords: telecommunications, oligopoly, network competition, access regulation

JEL Classification: L96, L51, D43

Suggested Citation

Liu, Yan and Sun, Guang-Zhen, Competition and Access Price Regulation with Multiple Networks (November 11, 2009). Available at SSRN: https://ssrn.com/abstract=1685757 or http://dx.doi.org/10.2139/ssrn.1685757

Yan Liu (Contact Author)

Monash College ( email )

Melbourne
Australia

Guang-Zhen Sun

Monash University - Department of Economics ( email )

Wellington Road
Clayton, Victoria 3
Australia
61-3-99052409 (Phone)
61-3-99055476 (Fax)

Max Planck Institute for Research Into Economic Systems

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

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