Pricing Strategies and Welfare Effects of Competition between Two Next-Generation Platforms

35 Pages Posted: 31 Jan 2012

See all articles by Fernando Beltrán

Fernando Beltrán

University of Auckland Business School

William W. Sharkey

Federal Communications Commission (FCC)

Date Written: August 15, 2009

Abstract

This paper presents the results of a computational application that dynamically models competition between two Next-Generation Networks (NGN) called platforms. As NGNs serve multiple types of consumers, we consider end-users and content providers who both require connection to the platform. The dynamics of competition are modeled by calculating equilibrium prices in each of a number of time periods. Equilibrium prices are a function of market shares and content provision in the previous period, along with prices and traffic patterns in the current period. We use the model to examine three issues of relevance to the current telecommunications policy debate: whether duopoly competition is viable, and if so how its performance compares to alternative regulated or monopoly outcomes; the impact of interconnection charges on total surplus and the distribution of surplus among market participants; and the impact of platform usage charges for content providers or more explicit blocking of off-platform content on total surplus and the distribution of surplus.

Suggested Citation

Beltrán, Fernando and Sharkey, William W., Pricing Strategies and Welfare Effects of Competition between Two Next-Generation Platforms (August 15, 2009). TPRC 2009, Available at SSRN: https://ssrn.com/abstract=1996025

Fernando Beltrán (Contact Author)

University of Auckland Business School ( email )

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HOME PAGE: http://unidirectory.auckland.ac.nz/profile/f-beltran

William W. Sharkey

Federal Communications Commission (FCC) ( email )

Rm. TW-B204
Washington, DC 20554
United States
202-418-2743 (Phone)
202-418-1413 (Fax)

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