Author： Peitz Martin
Publisher： Springer Publishing Company
ISSN： 0922-680X
Source： Journal of Regulatory Economics, Vol.28, Iss.3, 2005-11, pp. : 327-343
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Abstract
Suppose that a strong and a weak operator compete in a telecommunications market. To terminate a call operators need access to the competitor’s network if the call is off-net. Operators set two-part tariffs and price-discriminate according to termination of a call. Suppose as a benchmark that access prices are regulated at costs. I show that the weak operator’s profit and consumer welfare increase if the regulator sets a higher price to access the weak operator’s network. However, total surplus decreases even locally.
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