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The Revenue-Sharing Rule for Interconnection Charges

The Revenue-Sharing Rule for Interconnection Charges Abstract In this paper we explore the economic principle behind the revenue-sharing rule for interconnection charges. Our main finding is that symmetric firms can collude by splitting the revenues equally. We further characterize the optimal revenue-sharing ratio and discuss the relationship between optimal ratio and the optimal access price. We also show that the revenue-sharing rule can have the perverse effect of inducing a firm to raise its own costs in order to gain a higher share of revenues. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Japanese Economic Review Springer Journals

The Revenue-Sharing Rule for Interconnection Charges

The Japanese Economic Review , Volume 55 (3): 13 – Sep 1, 2004

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References (13)

Publisher
Springer Journals
Copyright
2004 Japanese Economic Association
ISSN
1352-4739
eISSN
1468-5876
DOI
10.1111/j.1468-5876.2004.00274.x
Publisher site
See Article on Publisher Site

Abstract

Abstract In this paper we explore the economic principle behind the revenue-sharing rule for interconnection charges. Our main finding is that symmetric firms can collude by splitting the revenues equally. We further characterize the optimal revenue-sharing ratio and discuss the relationship between optimal ratio and the optimal access price. We also show that the revenue-sharing rule can have the perverse effect of inducing a firm to raise its own costs in order to gain a higher share of revenues.

Journal

The Japanese Economic ReviewSpringer Journals

Published: Sep 1, 2004

Keywords: economics, general; microeconomics; macroeconomics/monetary economics//financial economics; econometrics; development economics; economic history

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