Foreclosing Competition Through High Access Charges and Price Discrimination

30 Pages Posted: 26 Sep 2016

See all articles by Ángel L. López

Ángel L. López

Autonomous University of Barcelona

Patrick Rey

Toulouse School of Economics; Centre for Economic Policy Research (CEPR)

Date Written: September 2016

Abstract

This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non‐linear tariffs and may charge different prices for on‐net and off‐net calls. When access charges are high, this allows the incumbent to foreclose the market in a profitable way if switching costs are sufficiently large. In the absence of termination‐based price discrimination, however, such foreclosure strategies are not profitable.

Suggested Citation

López, Ángel L. and Rey, Patrick, Foreclosing Competition Through High Access Charges and Price Discrimination (September 2016). The Journal of Industrial Economics, Vol. 64, Issue 3, pp. 436-465, 2016. Available at SSRN: https://ssrn.com/abstract=2842855 or http://dx.doi.org/10.1111/joie.12115

Ángel L. López (Contact Author)

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Patrick Rey

Toulouse School of Economics ( email )

2 Rue du Doyen-Gabriel-Marty
Toulouse, 31042
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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