Mark Harrison and J. Jude

"Quantity competition with access fees"

JEL codes:

Abstract:  We analyze an oligopoly model where firms choose both quantities and access fees. Per unit prices are determined endogenously to equate quantity demanded with quantity supplied at each firm. In a Nash equilibrium of the game played by firms, the per unit prices equal marginal cost and access fees may or may not extract all consumer surplus. As the number of firms increases, access fees fall below net consumer surplus and toward zero. Existence is guaranteed if Marshallian consumer surplus is not too concave. With open entry, quantity competition with access fees may be less efficient than without access fees