Competition between multiple asymmetric networks: Theory and applications

This paper presents a tractable model of network competition with many firms, elastic subscriber demand, off-net price discrimination, call externalities, and cost and market share asymmetries. We characterize stability in expectations and equilibrium under firm- and market-level network effects. The model is applied to simulate the effects of termination rates, market maturity, and retail pricing strategies. We show that predictions based on duopoly models can be misleading, in particular concerning the effects of termination rates. •Feasible model of competition between many interconnected asymmetric networks•Features on/off-net differentiation, two-part tariffs and elastic subscription demand•Equilibrium and market- and firm-level stability criteria are derived•We analyze competitive effects of termination rates and retail pricing strategies•Number of firms and stage of market development are important to assess effects