We develop models of bilateral oligopoly with two-way traffic exchanges to study the impact of competition and government regulatory policies on the international telephone markets. When carriers in each country are required to act collectively in setting a uniform settlement rate for inbound...

We develop models of bilateral oligopoly with traffic exchanges to study the competition and regulatory policies in the international telephone markets. Under the requirement of uniform settlement rates, the proportional return rule (PRR) inflates the rates and hence neutralizes PRR's effect on...