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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Ph: +46 8 665 4526
Mob: +46 70 727 5448
thomas.tangeras@ifn.se

Joacim Tåg

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

Interdisciplinary European Studies

Trust in the European Union in Challenging Times

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This is the first book in the Interdisciplinary European Studies collection. This volume provides an interdisciplinary perspective on trust in the EU from the vantage point of political science, law and economics. Lars Oxelheim, Lund University and affiliated to IFN, is one of the authors.

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