This paper explores the ability of an incumbent to use introductory offers to dominate a market in the face of a more efficient rival when network effects rather than scale economies are present. Both in the case of one-sided and two-sided markets, for introductory offers to be profitable when...

This paper models settlement arrangements between international telecommunication carriers. The FCC in the U.S. claims these arrangements cost U.S. consumers billions of dollars annually, largely to subsidize foreign carriers in low-income countries. Our model shows why income differentials...

We provide a framework for analyzing two-sided markets that allows for different degrees of product differentiation on each side of the market. When platforms are viewed as homogenous by sellers but heterogeneous by buyers, we show that competitive bottlenecks arise endogenously. In equilibrium,...

This paper provides a snapshot of the state of the literature on payment cards, particularly from the perspective of interchange fees and the economics literature on two-sided markets. The paper aims to integrate a wide range of theoretical papers with the relevant empirical research and...

We develop a model of competition between interconnected networks, that allows for carriers to differ in size. Under two-part pricing, we show that because of asymmetry the larger network will always prefer a reciprocal interconnection charge be set at cost. For sufficiently large asymmetry the...

Many platforms that facilitate transactions between buyers and sellers charge ad valorem fees in which fees depend on the transaction price set by sellers. Given these platforms do not incur significant costs that vary with transaction prices, their use of ad valorem fees has raised...

We model exclusive dealing when the incumbent and potential entrant offer differentiated products and buyers are downstream firms. While the resulting exclusive dealing is always anticompetitive, it does not necessarily involve foreclosure. Rather, when products are sufficiently differentiated,...

We re-examine tacit collusion under a simple punishment rule in which firms match any lower price by their rivals, but otherwise leave their prices unchanged. We provide conditions under which this simple rule sustains collusion and is credible. Provided competition is imperfect, collusion can...

Recent deregulation of telecommunications in the US and elsewhere has highlighted the importance of interconnection in network industries. In this paper, we analyse interconnection in a deregulated network where the participants compete in the final retail market. We consider both the case of a...

This paper analyzes the consequences of multihoming on private and social incentives for compatibility. Multihoming occurs in our model when consumers buy from both of two competing firms so as to capture network benefits. We address whether the ability of consumers to multihome means...