Foreclosing Competition through Access Charges and Price Discrimination

Ángel L. López and Patrick Rey
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Ángel L. López: IESE Business School

No 2009.99, Working Papers from Fondazione Eni Enrico Mattei

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. Departing from cost-based access pricing allows the incumbent to foreclose the market in a profitable way. If the incumbent benefits from customer inertia, then it has an incentive to insist in the highest possible access markup even if access charges are reciprocal and even in the absence of actual switching costs. If instead the entrant benefits from customer activism, then foreclosure is profitable only when switching costs are large enough.

Keywords: Access Pricing; Entry Deterrence; Interconnection; Network Competition; Two-way Access (search for similar items in EconPapers)
JEL-codes: L41 L51 L96 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-com, nep-ind and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Foreclosing Competition through Access Charges and Price Discrimination (2015)
Working Paper: Foreclosing Competition through Access Charges and Price Discrimination (2015)
Working Paper: Foreclosing Competition through Access Charges and Price Discrimination (2009)
Working Paper: Foreclosing competition through access charges and price discrimination (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2009.99

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