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Author: Wouter Dessein Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Previous research, assuming linear pricing, has argued that telecommunications networks may use a high access charge as an instrument of collusion. I show that this conclusion is difficult to maintain when operators compete in nonlinear pricing: (i) As long as subscription demand is inelastic, profits can remain independent of the access charge, even when customers are heterogeneous and networks engage in second-degree price discrimination. (ii) When demand for subscriptions is elastic, networks may increase profits by agreeing on an access charge below marginal cost (relative to cost-based access pricing). Welfare is typically increased by setting the access charge above marginal cost.
Author: Wouter Dessein Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Previous research, assuming linear pricing, has argued that telecommunications networks may use a high access charge as an instrument of collusion. I show that this conclusion is difficult to maintain when operators compete in nonlinear pricing: (i) As long as subscription demand is inelastic, profits can remain independent of the access charge, even when customers are heterogeneous and networks engage in second-degree price discrimination. (ii) When demand for subscriptions is elastic, networks may increase profits by agreeing on an access charge below marginal cost (relative to cost-based access pricing). Welfare is typically increased by setting the access charge above marginal cost.
Author: Nicolas Curien Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We analyze optimal pricing policies in local telecommunications subject to bypass for the access of long-distance carriers. We first consider the case of a regulated monopoly that operates the local network and has access to an additional technology (bypass) more efficient for large customers. We then study how competition in bypass affects the optimal nonlinear pricing policy and the resulting allocation. When transfers are allowed between the regulator and the network operator, bypass competition benefits consumers at the expense of the taxpayer, otherwise it benefits large consumers but hurts small ones.
Author: Jean-Jacques Laffont Publisher: MIT Press ISBN: 9780262621502 Category : Business & Economics Languages : en Pages : 340
Book Description
The authors analyze regulatory reform and the emergence of competitionin network industries using the state-of-the-art theoretical tools ofindustrial organization, political economy, and the economics ofincentives.
Author: Bridger M. Mitchell Publisher: Cambridge University Press ISBN: 9780521426787 Category : Business & Economics Languages : en Pages : 332
Book Description
Systematically reviews recent innovations in the economic theory of pricing and extends results to the conditions which characterize telecommunications markets
Author: Hongxia Shen Publisher: ISBN: 9780549096375 Category : Languages : en Pages : 104
Book Description
This dissertation addresses optimal linear and nonlinear pricing policy design for a monopolistic network service provider with various types of public and private information on user types. In the communication network pricing literature, it is the linear pricing schemes that have been largely adopted, and here we investigate both linear and nonlinear pricing within the framework of a hierarchical Stackelberg (leader-follower) game, where the service provider sets prices for the resources (bandwidth) he offers as the leader, and the users respond by their choices of the amount of bandwidth (flow) they are willing to pay for. At the lower level, the presence of congestion cost (negative network effect) in the net utility functions of users leads to a noncooperative game among themselves, with Nash or Bayesian equilibrium being natural candidates for a solution. In the nonlinear pricing case, the approach is to view the problem as a reverse Stackelberg game, which is also an incentive-design problem. We also consider, for both linear and nonlinear pricing, three different scenarios based on the information sharing structure for all parties on the users' true types, namely complete information, partially incomplete information, and totally incomplete information. For each case, we obtain the optimal, or near-optimal, pricing policy that maximizes the service provider's profit given the noncooperative price-taking behavior of the users, generally for the asymptotic case regarding the number of users, since our focus is on communication networks with a large user population. Comparative studies between linear and nonlinear pricing, as well as between the three classes of informational scenarios, are carried out to evaluate profit improvement by adoption of nonlinear pricing and the service provider's game preferences.
Author: Arun Sundararajan Publisher: ISBN: Category : Languages : en Pages : 34
Book Description
A number of technology products display positive network effects, and are used invariable quantities by heterogeneous customers. Examples include operating systems, infrastructureand back-end software, web services and networking equipment. This paper studies optimalnonlinear pricing for such products, under incomplete information, and with the threat of competitiveentry. Both homogeneous and heterogeneous network effects are modeled. Conditions underwhich a fulfilled-expectations contract exists and is unique are established. While network effectsgenerally raise price, it is shown that accompanying changes in consumption depend on the natureof the network effects - in some cases, it is optimal for the monopolist to induce no changes in usageacross customers, while in others cases, network effects raise the usage of all market participants.Optimal pricing is shown to include quantity discounts that increase with usage, and may also involvea nonlinear two-part tariff. These results highlight the impact of network effects on trade-offsbetween price discrimination and value creation, and have important managerial implications forpricing policy in technology markets.The need to deter competitive entry generally lowers profits for the monopolist, and increasescustomer surplus. When network effects are homogeneous across customers, the resulting entry-deterringmonopoly contract is a fixed fee and results in the socially optimal outcome. However,when the magnitude of heterogeneous network effects is relatively high, there are no changes intotal surplus induced by the entry threat, and the price changes merely cause a transfer of valuefrom the seller to its customers. The presence of network effects, and of a credible entry threat, arealso shown to increase distributional efficiency by reducing the disparity in relative value capturedby different customer types. Regulatory and policy implications of these results are discussed.
Author: Arun Sundararajan Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
A number of technology products display positive network effects, and are used in variable quantities by heterogeneous customers. Examples include operating systems, infrastructure and back-end software, web services and networking equipment. This paper studies optimal nonlinear pricing for such products, under incomplete information, and with the threat of competitive entry. Both homogeneous and heterogeneous network effects are modeled. Conditions under which a fulfilled-expectations contract exists and is unique are established. While network effects generally raise prices, it is shown that accompanying changes in consumption depend on the nature of the network effects - in some cases, it is optimal for the monopolist to induce no changes in usage across customers, while in others cases, network effects raise the usage of all market participants. Optimal pricing is shown to include quantity discounts that increase with usage, and may also involve a nonlinear two-part tariff. These results highlight the impact of network effects on trade-offs between price discrimination and value creation, and have important managerial implications for pricing policy in technology markets. The need to deter competitive entry generally lowers profits for the monopolist, and increases customer surplus. When network effects are homogeneous across customers, the resulting entry-deterring monopoly contract is a fixed fee and results in the socially optimal outcome. However, when the magnitude of heterogeneous network effects is relatively high, there are no changes in total surplus induced by the entry threat, and the price changes merely cause a transfer of value from the seller to its customers. The presence of network effects, and of a credible entry threat, are also shown to increase distributional efficiency by reducing the disparity in relative value captured by different customer types. Regulatory and policy implications of these results are discussed.
Author: Wouter Dessein
Author: Wouter Dessein
Author: Nicolas Curien
Author: Liang Chen
Author: Jean-Jacques Laffont
Author: Bridger M. Mitchell
Author: Hongxia Shen
Author: Anirudh S. Dhebar
Author: Arun Sundararajan
Author: Arun Sundararajan
Author: Jean-Jacques Laffont