Pricing Regulation Under Bypass Competition

Rand Journal of Economics, Vol. 29, No. 2

Posted: 10 Jun 1998

See all articles by Nicolas Curien

Nicolas Curien

CNAM, Conservatoire des Arts et Metiers

Bruno Jullien

University of Toulouse 1 - Toulouse School of Economics (TSE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Patrick Rey

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

Abstract

We analyze optimal pricing policies in local telecommunications subject to bypass for the access of long-distance carriers. We first consider the case of a regulated monopoly that operates the local network and has access to an additional technology (bypass) more efficient for large customers. We then study how competition in bypass affects the optimal nonlinear pricing policy and the resulting allocation. When transfers are allowed between the regulator and the network operator, bypass competition benefits consumers at the expense of the taxpayer, otherwise it benefits large consumers but hurts small ones.

JEL Classification: L50, L51

Suggested Citation

Curien, Nicolas and Jullien, Bruno and Rey, Patrick, Pricing Regulation Under Bypass Competition. Rand Journal of Economics, Vol. 29, No. 2. Available at SSRN: https://ssrn.com/abstract=97436

Nicolas Curien

CNAM, Conservatoire des Arts et Metiers ( email )

292, rue Saint-Martin
Paris cedex 03, 75141
France

Bruno Jullien (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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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