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Asymmetric Regulation of Access and Price Discrimination in Telecommunications*

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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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Authors and Affiliations

  1. International University in Germany, Campus 3, 76646, Bruchsal, Germany

    Martin Peitz

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  1. Martin Peitz
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Correspondence to Martin Peitz.

Additional information

*I received helpful comments from Mark Armstrong, Toker Doganoglu, Tommaso Valletti, Julian Wright, and, in particular, two referees and the editor Michael Crew. I gratefully acknowledge financial support from the Deutsche Forschungsgemeinschaft (Heisenberg Fellowship).

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Peitz, M. Asymmetric Regulation of Access and Price Discrimination in Telecommunications*. J Regul Econ 28, 327–343 (2005). https://doi.org/10.1007/s11149-005-3963-1

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  • DOI: https://doi.org/10.1007/s11149-005-3963-1

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