Competition in Networks with Call Externalities

GATE Working Paper No. 03.08

20 Pages Posted: 25 Jun 2004

See all articles by Edmond Baranes

Edmond Baranes

Université Montpellier 1

Laurent Flochel

University Lyon 2

Date Written: May 2004

Abstract

This paper considers a model of two interconnected networks with different qualities. There are call externalities in the sense that consumers value calls they send and receive. Networks compete in two part tariffs. We show that call externalities create private incentives for each competitor to charge low access prices. This result moderates the risk of tacit collusion when competitors can freely negotiate their access charges.

Keywords: Telecommunications, call externalities, interconnection

JEL Classification: D43, L41, L96

Suggested Citation

Baranes, Edmond and Flochel, Laurent, Competition in Networks with Call Externalities (May 2004). GATE Working Paper No. 03.08. Available at SSRN: https://ssrn.com/abstract=558551 or http://dx.doi.org/10.2139/ssrn.558551

Edmond Baranes

Université Montpellier 1 ( email )

Avenue de la Mer Site Richter
163 Rue Auguste Broussonnet
34006 Montpellier Cedex 1, Cedex 2 34090
France

Laurent Flochel (Contact Author)

University Lyon 2 ( email )

CNRS UMR 5824
93, chemin des Mouilles - B.P.167
69130 Ecully cedex
France

HOME PAGE: http://www.gate.cnrs.fr/equipe/perso/flochel/flochel.html?

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