Alexander, R: Access Pricing

This book introduces a new theoretical framework for the analysis of access pricing (the prices that networks charge each other for call completions) and the modeling of network interconnection competition. Prior seminar work on ‘two-way‘ access by Armstrong (1998), Laffont, Rey and Tirole (1998), and Carter and Wright (1999), has been built on a two-network Hotelling (1929) differentiated competition model applied to network interconnection. The current research has developed an alternative approach that is based on a cross-nested logit discrete/continuous consumer choice model. A principal contribution of the new modeling framework is that in addition to being able to analyze interconnection competition among more than two networks, it is ed to incorporate the element of multiple network subscription where consumers may be simultaneously subscribed to more than one type of access network. By introducing multiple-network subscription and usage substitution for users subscribed to multiple networks, the analysis allows more general assessments to be made of the impact of access pricing schemes on the degree of competition between interconnected networks.