Network shares and retail prices are not symmetric in the telecommunications market with multiple bottlenecks which give rise to new questions of access fee regulation. In this paper we consider a model with two types of asymmetry arising from different entry timing, i.e. a larger reputation for the incumbent and lower cost of servicing for the entrant as a result of more advanced technology. As a result firms have divergent preferences over the access fee. In case of linear and non-linear prices the access fee might still act as the instrument of collusion, but only if a side-payment is permitted which is generally welfare decreasing. Moreover, in contrast with the European regulatory framework, the access fee on the basis of termination cost might not necessarily be a socially preferable solution.

access fee, brand loyalty, cost asymmetry, imperfect competition, network interconnection
Production, Pricing, and Market Structure; Size Distribution of Firms (jel L11), Oligopoly and Other Imperfect Markets (jel L13), Economics of Regulation (jel L51), Telecommunications (jel L96)
Tinbergen Institute Discussion Paper Series
Tinbergen Institute

Kocsis, V. (2005). Network Asymmetries and Access Pricing in Cellular Telecommunications (No. TI 05-085/1). Tinbergen Institute Discussion Paper Series. Retrieved from