Asymmetric Equilibria And Non-Cooperative Access Pricing In Telecommunications

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Executive Summary

This paper looks at competition in the Telecommunications industry with non-linear tariffs and network based price discrimination. Allowing for asymmetric networks and non-cooperatively chosen access prices simultaneously allows to explicitly derive non-reciprocal equilibrium access price choices that are above the efficient level. The recent literature on the network interconnection and pricing strategies in the Telecommunications Industry originating in the work of Armstrong (1998) and Laffont, Rey, and Tirole (LRT 1998a,b) has generically assumed that competition takes place between symmetric networks.

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