Faculty Digital Archive

Archive@NYU >
Stern School of Business >
Economics Working Papers >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/29873

Title: Network Competition: Workhorse Resurrection
Authors: Tangeras, Thomas P. - Research Institute of Industrial Economics
Keywords: Bill-and-keep, call price discrimination, network competition, non-linear prices, pro t neutrality
Issue Date: 2010
Series/Report no.: Net Institute Working Paper;10-05
Abstract: I generalize the workhorse model of network competition (Armstrong, 1998; Laffont, Rey and Tirole, 1998a,b) to include income effects in call demand. Income effects imply that call demand depends also on the subscription fee, not only on the call price. In the standard case of differentiated networks, weak income effects are enough to deliver results in line with stylized facts: The networks have an incentive to agree on high mobile termination rates to soften competition. They charge a higher price for calls outside (off-net) than inside (on-net) the network. This vindicates the use of (a perturbation of) the workhorse model of network competition.
URI: http://hdl.handle.net/2451/29873
Appears in Collections:Economics Working Papers

Files in This Item:

File Description SizeFormat
Tangeras_10-05.pdfTangeras_10-05207.22 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.

 

The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS