Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Tuesday, October 20, 2009

Foreclosing Competition through Access Charges and Price Discrimination

Posted by D. Daniel Sokol

Angel Lopez (IESE Business School) and Patrick Rey (Toulouse - Economics) address Foreclosing Competition through Access Charges and Price Discrimination.

ABSTRACT: This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non-linear tari¤s and may charge di¤erent prices for on-net and o¤-net calls. Departing from cost-based access pricing allows the incumbent to foreclose the market in a pro…table way. If the incumbent bene…ts from customer inertia, then it has an incentive to insist in the highest possible access markup even if access charges are reciprocal and even in the absence of actual switching costs. If instead the entrant bene…ts from customer activism, then foreclosure is pro…table only when switching costs are large enough.

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This is a very interesting topic. I'd love to learn more about it.

Posted by: Picaboo | Oct 20, 2009 12:52:04 PM

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