Network Asymmetries and Access Pricing in Cellular Telecommunications

Tinbergen Institute Working Paper No. 05-085/1

31 Pages Posted: 27 Sep 2005

See all articles by Viktoria Kocsis

Viktoria Kocsis

University of Amsterdam - SEO Economic Research

Date Written: August 2005

Abstract

Network shares and retail prices are not symmetric in the telecommunications market with multiple bottlenecks which give rise to new questions of access fee regulation. In this paper we consider a model with two types of asymmetry arising from different entry timing, i.e. a larger reputation for the incumbent and lower cost of servicing for the entrant as a result of more advanced technology. As a result firms have divergent preferences over the access fee. In case of linear and non-linear prices the access fee might still act as the instrument of collusion, but only if a side-payment is permitted which is generally welfare decreasing. Moreover, in contrast with the European regulatory framework, the access fee on the basis of termination cost might not necessarily be a socially preferable solution.

Keywords: Cost asymmetry, brand loyalty, imperfect competition, network interconnection, access fee

JEL Classification: L11, L13, L51, L96

Suggested Citation

Kocsis, Viktoria, Network Asymmetries and Access Pricing in Cellular Telecommunications (August 2005). Tinbergen Institute Working Paper No. 05-085/1, Available at SSRN: https://ssrn.com/abstract=805810 or http://dx.doi.org/10.2139/ssrn.805810

Viktoria Kocsis (Contact Author)

University of Amsterdam - SEO Economic Research ( email )

Roetersstraat 29
Amsterdam, 1018 WB
Netherlands

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