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| Author: | Jeon, D-S. Laffont, J-J. Tirole, J. |
| Title: | On the "receiver-pays" principle |
| Journal: | RAND Journal of Economics
2004 : SPRING, VOL. 35:1, p. 85-110 |
| Index terms: | Networks Telecommunications industry Telephone industry |
| Language: | eng |
| Abstract: | The theory of network competition is extended in this paper by allowing receivers to derive a surplus from receiving calls and to affect the volume of communications by hanging up. It is investigated, how receiver charges affect internalization of the call externality. When the receiver charge and the termination charge are both regulated, there exists an efficient equilibrium. When reception charges are market determined, each network finds it optimal to set the prices for calling and reception at its off-net costs. The symmetric equilibrium is efficient for a proper choice of termination charge. |
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