Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1005: International Network Competition

Thomas Tangerås () and Joacim Tåg ()
Additional contact information
Thomas Tangerås: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Joacim Tåg: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: We analyse network competition in a market with international calls. National regulatory agencies (NRAs) have incentives to set regulated termination rates above marginal cost to extract rent from international call termination. International network ownership and deregulation are alternatives to combat the incentives of NRAs to distort termination rates. We provide conditions under which each of these policies increase efficiency and aggregate welfare. Our findings provide theoretical support for recent policy initiatives by the European Commission.

Keywords: Cross-border ownership; Decentralized regulation; International markets; Network

JEL-codes: L51; L96

38 pages, February 12, 2014

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