International network competition under national regulation

Thomas P. Tangerås, Joacim Tåg*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

1 Citation (Scopus)

Abstract

We extend the workhorse model of network competition to international calls. This model enables us to show that national regulatory authorities (NRAs) maximizing domestic welfare have incentives to increase termination rates above the social optimum to extract rent from international call termination. Excessive termination rates distort prices but transfer surplus from foreign to domestic consumers via intensified network competition. The model can explain the regulation of termination rates through rate floors. International network ownership and deregulation are alternatives to combat the incentives of NRAs to distort termination rates. We identify conditions under which each of these policies increases aggregate welfare.

Original languageEnglish
Peer-reviewed scientific journalInternational Journal of Industrial Organization
Volume47
Pages (from-to)152-185
Number of pages34
ISSN0167-7187
DOIs
Publication statusPublished - 01.07.2016
Externally publishedYes
MoE publication typeA1 Journal article - refereed

Keywords

  • Conglomerate merger
  • International markets
  • National regulation
  • Network competition
  • Telecommunications
  • Termination rates

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