Authors
Tommaso M Valletti, Carlo Cambini
Publication date
2005/7/1
Journal
RAND Journal of Economics
Pages
446-467
Publisher
RAND
Description
We analyze the impact of two-way access charges on the incentives to invest in networks with different levels of quality. When quality has an impact on all calls initiated by customers (destined both on-net and off-net), we obtain a result of "tacit collusion" even in a symmetric model with two-part pricing. Firms tend to underinvest in quality, and this is exacerbated if they can negotiate reciprocal termination charges above cost. When the quality of off-net calls depends on the interaction between the quality of the two networks, no network has an incentive to jump ahead of its rival by investing more.
Total citations
Scholar articles
TM Valletti, C Cambini - RAND Journal of Economics, 2005