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Network Competition: I. Overview and Nondiscriminatory Pricing

Laffont, Jean-Jacques, Rey, Patrick and Tirole, Jean (1998) Network Competition: I. Overview and Nondiscriminatory Pricing. RAND Journal of Economics, 29 (1). pp. 1-37.

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We develop a model of unregulated competition between interconnected networks and analyze the mature and transition phases of the industry in this deregulated environ-ment. Networks pay (negotiated or regulated) access charges to each other and com-pete in prices for customers. We show that a competitive equilibrium may fail to exist for large access charges or for large network substitutability, and that freely negotiated access charges may prevent effective competition in the mature phase of the industry and erect barriers to entry in the transition toward competition. Last, we examine the meaning and impact of policies such as the efficient component pricing rule.

Item Type: Article
Language: English
Date: 1998
Refereed: Yes
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 18 Jan 2012 05:45
Last Modified: 07 Mar 2018 13:20
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