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Based interconnection tariff theory

Author: MaYuan
Tutor: ZhangZuoZhu
School: Graduate School of the Chinese Academy of Social Sciences
Course: Quantitative Economics
Keywords: Network competition Tariff - based settlement rules Conspiracy Based on the cost of the settlement rules
CLC: F626
Type: Master's thesis
Year: 2005
Downloads: 156
Quote: 0
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Abstract

With the deepening of the telecommunications reform, \It can be said, good or bad deal with the problem of interoperability is a key telecom market's ability to form an effective competition. At present, the discussion on the interconnection rules, the main idea is based on costs. However, in many developing countries, due to lack of necessary regulatory experience, and is estimated interconnection costs necessary data and resources, regulatory agencies are often difficult to adopt cost-based settlement rules in favor of the temporary settlement rules, such as those based settlement of the tariff rules. Although this type of settlement rule has been widely used, but so far, only a few papers discuss the rules. This article in Laffont and Zhang Xinzhu (2001) based on assumed that interconnect the two sides based on tariff settlement rules, and analyzes network competitive equilibrium existence conditions. The results show that: when interconnect the two sides compete in a linear price, unless the network alternative is relatively small, or the balance of competition in the retail market price may not exist; equilibrium exists in the area, interconnect the two sides may be the settlement price coefficient as a collusive tool. Interconnect the two sides in two - part price competition, the competitive equilibrium is equally likely does not exist; equilibrium exists in the area, regardless of the equilibrium profit settlement price coefficient the Internet no motive conspired. Although similar to the conclusions in the above conclusions and LRT (1998a), but their internal mechanism is not the same. Improve settlement price in the based cost settlement rules, so that the interconnecting parties more reluctant to lower retail prices, because lower prices may gain market share, but will reduce the unit retail profits and worsening interconnection Conditions. Based tariff settlement rules, the settlement price coefficient interconnect the two sides more willing to reduce the retail price, the reason is that the price cuts may reduce unit retail profit, but will increase market share and improve the interconnection. In fact, the analysis showed that: two settlement rules under the settlement price equal interconnect the two sides in a linear price competition, based on the tariff settled under the rules of the balanced retail price will be less than the equilibrium under the cost settlement rules retail price, and its social welfare is higher than the costs are settled under the rules of the social welfare. Interconnect the two sides in two - part price competition based on the tariff settled under the rules of the balanced retail price will still be less than the the balanced retail price based on the cost of settlement under the rules, but its social welfare is greater than the costs are settled under the rules of the social welfare depends on the coefficient of the high and low of the settlement price. Speaking from the policy implications of these conclusions mean that the tariff-based settlement rules so interconnected the more motivated undercut or playing the \

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