Competition and mergers in networks with call externalities

This paper considers a model of two interconnected networks with different qualities. There are call externalities in the sense that consumers value calls they send and receive. Networks compete in two part tariffs. We show that call externalities create private incentives for each competitor to charge low access prices. This result moderates the risk of tacit collusion when competitors can freely negotiate their access charges. We also analyze the case of a merger between the two networks and give conditions under which the merger can be welfare improving.call externalities; interconnection; mergers; telecommunications

An Economist's Guide to Local Loop Unbundling

This guide provides a critical review of the economics literature on the desirability and the effects of unbundling the local loop. Firstly, we discuss recent contributions, which aim to quantify the effect of unbundling regulations on the development of broadband services. Secondly, we review the literature on the potential impact of unbundling on investment and innovation incentives. Finally, we conclude this paper by offering some suggestions for further research.Unbundling; broadband diffusion; investment and innovation

An Economist's Guide to Local Loop Unbundling

This guide provides a critical review of the economics literature on the desirability and the effects of unbundling the local loop. Firstly, we discuss recent contributions, which aim to quantify the effect of unbundling regulations on the development of broadband services. Secondly, we review the literature on the potential impact of unbundling on investment and innovation incentives. Finally, we conclude this paper by offering some suggestions for further research.Unbundling; broadband diffusion; investment and innovation

Internet access and investment incentives for broadband service providers

This paper studies a model of the Internet broadband market as a platform in order to show how di¤erent pricing schemes from the so-called "net neutrality " can increase economic e¢ ciency by allowing more investment of access providers and enhancing consumers surplus and social welfare. We show that departing from the "net neutrality", where at rates are used, introducing termination fees can increase incentives to invest for the ISP and enhance social surplus. Keywords : Network neutrality, Flat rates, Termination fees.

Internet access and investment incentives for broadband service providers

This paper studies a model of the Internet broadband market as a platform in order to show how different pricing schemes from the so-called net neutrality may increased economic efficiency by allowing more investment of access providers and enhancing consumers surplus and social welfare. --Network neutrality,Flat rates,Termination fees

Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests

Our paper focuses on the relationship between market concentration and collusion sustainability in a framework of multimarket contacts. We consider two independent and symmetric markets in which a subset of firms are active in both markets. When firms are able to transfer market power from one market to another, firms have strong incentives to collude even in a highly competitive market. This result is relevant for competition policy since assessing market concentration using HHI index could be misleading in some situations.

Competition and mergers in networks with call externalities

Working Paper du GATE 2003-08This paper considers a model of two interconnected networks with different qualities. There are call externalities in the sense that consumers value calls they send and receive. Networks compete in two part tariffs. We show that call externalities create private incentives for each competitor to charge low access prices. This result moderates the risk of tacit collusion when competitors can freely negotiate their access charges. We also analyze the case of a merger between the two networks and give conditions under which the merger can be welfare improving.Cet article examine un modèle de deux réseaux de qualités différentes interconnectés. Il existe des externalités d'appels dans le sens où les consommateurs valorisent les appels qu'ils émettent et également ceux qu'ils recoivent. Les réseaux se font concurrence en tarif binôme. Nous montrons que les externalités d'appels créent des incitations privées pour chaque réseau à facturer l'accès à son réseau à un prix bas. Ce résultat modère le risque de collusion tacite lorsque les opérateurs preuvent négocier librement les prix d'accès qu'ils se facturent. Nous étudions également le cas d'une fusion entre les deux opérateurs et donnons les conditions sous lesquelles la fusion améliore le bien-être

Bundling and Collusion in Communications Markets

This paper deals with competition in communications markets between an incumbent and an entrant. We analyze the effect of bundling strategy by a firm who enters an incumbent market. This market dimension has profound implications on the sustainability of collusion in an infinitely repeated game framework. We show that the bundling strategy of the entrant might hinder collusion. Futhermore, we consider a setting in which the entrant uses a one-way access that the incumbent possesses. In such situation, we show that when the entrant bundles its products, a low access charge for call termination on the incumbent network might increase the feasibility of collusion. This result has an important policy implication

Accès stratégique des tiers au stockage et concurrence dans le secteur gazier

Cet article étudie les aspects stratégiques liés à l’accès des tiers au stockage (ATS) dans le secteur gazier. On montre que dans certaines configurations de marché, l’ATS peut être utilisé stratégiquement par des producteurs de gaz présents en aval qui se comportent alors comme des acheteurs sur le marché intermédiaire. L’objectif de ces achats stratégiques est de distordre la formation du prix sur le marché intermédiaire et ainsi d’accroître le coût du rival. Cette stratégie du producteur peut réduire l’efficacité collective de l’industrie gazière. Nous montrons qu’il est possible de réduire cette distorsion en autorisant l’intégration du stockage à un distributeur indépendant.This article studies strategic aspects connected to third party access to storage facilities (TPAS) in the gas sector. We show that in some market settings, TPAS can be used strategically by vertically integrated gas producers who behave as buyers in the intermediate market. The aim of these strategic purchases is to change the price formation in the intermediate market and in doing so increase rival’s costs. Such a strategy can reduce social efficiency in the industry. Finally, we show that this distortion could be reduced allowing the vertical integration of storage facilities to the independent downstream company