Price Strategies and Compatibility in Digital Networks

We analyze competition between two horizontally differentiated network providers. New technologies help the providers to collect consumer-specific information, and such technologies increase the providers' ability to use price discrimination. One example is the mobile providers' choice of investing into third generation mobile systems (3G). Compared to the current 2G systems (GSM), 3G gives the providers more accurate customer specific information (e.g. with respect to customers' location at any time). Since new technologies give the opportunity to implement price discrimination, an interesting question is how the price strategies (price discrimination or not) affect the incentives to unilaterally establish a walled garden where the rival's customers have imperfect access. The main message of the paper is that walled garden strategies are more likely when firms use price discrimination than when they all use linear pricing.Compatibility, Network Effects, Price Discrimination, Internet, Competition,

Managerial incentives and access price regulation

Telecommunications, Competition, Access pricing, L11, L13, L96,

Are Interactive TV-Pioneers and Surfers Different Breeds? Broadband Demand and Asymmetric Cross-Price Effects

We consider two different qualities of broadband access, one that simply means greater access speed to Internet applications and content, and a premium version that also gives access to interactive TV services. Based on a market survey we find that potential consumers of this premium broadband access do not consider basic broadband Internet access as a substitute. The price of basic broadband does not constrain the price that may be charged for the premium broadband that allows for interactive TV services. Copyright Kluwer Academic Publishers 2004Asymmetric cross-price effects, broadband access,