2016

International Network Competition under National Regulation

Reprint No. 2016:31

Author(s): Thomas Tangerås and Joacim TågYear: 2016 Title: International Journal of Industrial Organization Volume (No.): 47 (July) Pages: 152–185
Online article (restrictions may apply)
Preliminary version


We extend the workhorse model of network competition to international calls. This model enables us to show that national regulatory authorities (NRAs) maximizing domestic welfare have incentives to increase termination rates above the social optimum to extract rent from international call termination. Excessive termination rates distort prices but transfer surplus from foreign to domestic consumers via intensified network competition. The model can explain the regulation of termination rates through rate floors. International network ownership and deregulation are alternatives to combat the incentives of NRAs to distort termination rates. We identify conditions under which each of these policies increases aggregate welfare.


Reference:
Tangerås, Thomas and Joacim Tåg (2016), "International Network Competition under National Regulation". International Journal of Industrial Organization 47(July), 152–185.

Thomas Tangerås

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thomas.tangeras@ifn.se

Joacim Tåg

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Ph: +46 8 665 4524
joacim.tag@ifn.se

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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