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Telecommunications Pricing : Theory and Practice - Bridger M. Mitchell

Telecommunications Pricing

Theory and Practice

Paperback Published: 16th March 1992
ISBN: 9780521426787
Number Of Pages: 328

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The past decade has witnessed a surge of pricing innovations in the US telecommunications industry. This volume systematically reviews recent innovations in the economic theory of pricing and extends results to conditions that characterize telecommunications markets. It then examines the implementation of normative pricing theory in selected US telephone tariffs. The experience accumulated in the United States provides a rich and diverse data base and a laboratory for examining the practical consequences of pricing innovations. Throughout this volume the objective is to develop and illuminate the relationships between the normative economic theory of pricing--with its objectives of social welfare, economic efficiency, and fairness--and telecommunications pricing as it is practiced by business and regulators. In particular, the new pricing schemes are related to the theory of multiproduct and nonlinear pricing. The book describes the welfare and competitive properties of such pricing schemes and draws conclusions for future pricing problems in the areas of broadband networks and open network architecture. Many of the general theoretical pricing principles and lessons from US pricing experience should prove directly applicable to telecommunications services in other countries and to other industries, including electricity and natural gas supply, air and rail transportation, and postal and parcel services.

Industry Reviews

"...an excellent survey of the theoretical literature on optimal pricing of utilities (with their own applications to telecommunications) coupled with a very up to date and fascinating discussion of actual pricing policies by local exchange and interexchange carriers. It is an excellent addition to previous books on regulation, but is particularly useful to those who want an overview of the current state of telecommunications economics." Journal of Economic Literature

List of figuresp. xii
List of tablesp. xiv
Acknowledgmentsp. xv
Pricing and Telecommunications
Introductionp. 3
Telecommunications pricingp. 3
Theory and practicep. 4
Overviewp. 6
Telecommunications production, costs, and pricingp. 7
Stylized telecommunications technologyp. 7
The US contextp. 15
Major tariff developmentsp. 17
Recent Developments in the Normative Economic Theory of Tariffs
Types of tariffsp. 23
The contextp. 23
Normative frameworkp. 26
Overview of tariff typesp. 34
Linear tariffsp. 38
Marginal-cost pricesp. 38
Ramsey pricing (demand-oriented tariffs)p. 43
Ramsey pricing with competitionp. 48
Ramsey pricing with consumption externalitiesp. 55
Definition of servicesp. 61
Customer-class pricingp. 64
Dynamic pricingp. 66
Conclusionsp. 72
Nonlinear tariffsp. 73
The consumption frameworkp. 73
Two-part tariffsp. 77
Two-part tariffs with consumption externalitiesp. 81
Discriminatory two-part tariffsp. 83
Smooth nonlinear tariffsp. 85
Discrete multipart and optional two-part tariffsp. 95
Tying/bundling versus unbundlingp. 105
Nonlinear tariffs in oligopolyp. 112
Second-best piecemeal policyp. 114
Cost-based tariffsp. 118
Subsidy-free pricingp. 118
Cost-axiomatic pricingp. 134
Fully distributed-cost pricingp. 137
Special issues of carrier ratesp. 140
Second-best piecemeal policy revisitedp. 143
Telephone Rate Structures in the United States
Regulation and US retail ratesp. 149
The impact of regulation on rate settingp. 149
Basic US retail ratesp. 156
Price capsp. 167
Optional calling plansp. 176
Theory of optional tariffs reconsideredp. 176
Development of ATandT's optional calling planp. 188
Nationwide optional calling plansp. 194
FCC guidelines for optional calling plansp. 199
Business bulk-rate tariffsp. 201
Local ratesp. 201
WATS tariffsp. 202
800-number servicesp. 206
Virtual private networksp. 207
Discounts for bundlingp. 208
Private linesp. 210
Custom tariffsp. 211
Pricing of carrier servicesp. 213
Carrier access ratesp. 213
Bypass of the local exchangep. 216
Incentive effectsp. 216
Nonlinear pricing of carrier accessp. 221
Social tariffsp. 224
Telephone penetrationp. 224
Goals of social tariffsp. 227
The history of social tariffsp. 228
Description of state programsp. 230
The costs of social tariffsp. 239
The welfare impact of social tariffsp. 243
Synthesis of theory and practicep. 249
Lessons from pricing theoryp. 249
Assessing practice in light of theoryp. 252
Pricing and the futurep. 258
US telephone price indexesp. 264
Bibliographyp. 287
Indexp. 301
Selected list of RAND booksp. 308
Table of Contents provided by Syndetics. All Rights Reserved.

ISBN: 9780521426787
ISBN-10: 0521426782
Audience: Professional
Format: Paperback
Language: English
Number Of Pages: 328
Published: 16th March 1992
Country of Publication: GB
Dimensions (cm): 22.61 x 15.04  x 1.78
Weight (kg): 0.47

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