1. INFORMATION EXCHANGE AND COMPETITION IN COMMUNICATIONS NETWORKS
- Author
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Cambini, Carlo and Valletti, Tommaso M.
- Subjects
Computer networks -- Analysis ,Information networks -- Analysis ,Business ,Economics - Abstract
To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6451.2008.00365.x Byline: CARLO CAMBINI ([dagger]), TOMMASO M. VALLETTI ([double dagger]) Keywords: L41; L96 Abstract: We develop a model of information exchange between calling parties. We characterize the equilibrium when two interconnected networks compete by charging both for outgoing and incoming calls. We show that networks have reduced incentives to use off-net price discrimination to induce a connectivity breakdown when calls originated and received are complements in the information exchange. This breakdown disappears if operators are allowed to negotiate reciprocal access charges. We also study the relationship between sending and receiving retail charges as a function of the level of access charges. We identify circumstances where private negotiations over access charges induce first-best retail prices. Author Affiliation: ([dagger])Politecnico di Torino, DSPEA, C.so Duca degli Abruzzi, 24, 10139 Turin, Italy.e-mail:carlo.cambini@polito.it ([double dagger])Imperial College London, University of Rome 'Tor Vergata' and CEPR, Business School, South Kensington Campus, London SW7 2AZ, U.K.e-mail:t.valletti@imperial.ac.uk
- Published
- 2008