2014

Network Competition with Income Effects

Reprint No. 2014:38

Author(s): Thomas TangeråsYear: 2014 Title: RAND Journal of Economics Volume (No.): 45 (3) Pages: 645–673
Online article (restrictions may apply)
Preliminary version


I generalize the workhorse model of network competition to include income effects in demand. Empirical work has shown income effects to be positive and statistically significant. Income effects deliver theoretical results consistent with regulatory concern about excessive termination rates: unregulated network operators competing in nondiscriminatory retail contracts negotiate termination rates above cost for any positive income effect. This also holds when operators discriminate between on-net and off-net calls if networks are differentiated. Operators profit from increasing termination rates above cost under second-degree price discrimination if a sufficient share of consumers prefer on-net/off-net contracts and their subscription demand is relatively inelastic.


Reference:
Tangerås, Thomas (2014), "Network Competition with Income Effects". RAND Journal of Economics 45(3), 645–673.

Thomas Tangerås

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Integrating Immigrants into the Nordic Labour Markets

An Overall Perspective

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Denmark, Finland, Norway and Sweden face similar problems of integrating large groups of immigrants, especially low-educated ones from outside the EU, into their labour markets. In this volume, edited by Lars Calmfors, IFN, and Nora Sánchez Gassen in cooperation with researchers from across the Nordic Region analyse how labour market integration of immigrants can be promoted. 

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