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An economic model measuring the effect of exclusive dealing and entry where buyers are homogenous price competitors is examined. Anticompetitive exclusive deals can still arise in an economy with competition among buyers.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.euroecorev.2005.08.004 Byline: Graeme Guthrie (a), John Small (b), Julian Wright (c) Abstract: Regulators across many different jurisdictions and industries have recently adopted the practice of setting access prices based on the current costs of providing the relevant facilities. Though widely regarded as being efficient, the efficiency implications of using current costs instead of historical costs have not been formally analyzed. Our analysis shows that given stochastic costs, forward-looking access prices retard investment and are generally dominated by access prices determined by historical cost whenever investment is desired. Author Affiliation: (a) School of Economics and Finance, P.O. Box 600, Victoria University of Wellington, Wellington, New Zealand (b) University of Auckland, New Zealand (c) National University of Singapore, Singapore Article History: Received 23 June 2004; Accepted 5 August 2005

A new card payment system for similar mindset consumers and merchants in competitive markets is presented. The model focuses on optimal fee payment charges of both customers and merchants.

This paper presents a model of a card payment system to address the pricing and roles that govern such systems. It evaluates the social optimality of privately set interchange fees and the adoption of a rule by payment systems to prevent merchants surcharging for card transactions using two extremes of merchant pricing--monopolistic pricing and perfect competition. Both types of merchant pricing constrain the ability of card schemes to use interchange fees and the no-surcharge role in anticompetitive ways, although for quite different reasons. The positive role of the no-surcharge rule in preventing excessive merchant surcharging is also highlighted. JEL classification: G21; L31; L42 Keywords: Payment systems; Banks; Credit; Debit cards; Interchange fees

A competition model for interconnected networks is analyzed. Simple regulation allows for identical access price assignment.

This paper analyses access pricing when a firm's customers create a bottleneck facility when a call made to a person with cellphone requires access to the firm of the subscriber. Thus, the cellular firms are free to set termination charges for fixed-line calls.

Byline: Iain Little (1), Julian Wright (2) Abstract: This paper explores the implications of Internet peering in the context of a model of competing, vertically integrated Internet Access Providers. We show that if regulation forbids settlement payments between firms, there will be under-investment in capacity and under-pricing of usage, both of which lead to excessive congestion. To overcome these problems, firms that are net providers of Internet infrastructure should be allowed to charge firms that are net users. We characterize the efficient level of these access payments, assuming usage can be appropriately measured. We find that refusal to peer and the charging of settlement payments may well be efficiency enhancing. Author Affiliation: (1) Network Economics Consulting Group (NECG), 156 Dryandra Street, O'Connor, ACT, 2602, Australia (2) Department of Economics, University of Auckland, Private Bag 92019, Auckland, New Zealand Article History: Registration Date: 16/10/2004

Byline: Julian Wright (1) Abstract: This paper models settlement arrangements between international telecommunication carriers. The FCC in the United States claims these arrangements cost United States consumers billions of dollars annually, largely to subsidize foreign carriers in low-income countries. A model is given which makes sense of this claim, as well as the role of costs, competition, and income disparities in settlement rate determination. Findings are tested using data spanning 17 years and 167 countries. Some implications are drawn for the FCC's recently proposed settlement rate caps, as well as for proposals for multilateral solutions. Author Affiliation: (1) University of Auckland Department of Economics, Private Bag 92019, Auckland, New Zealand Article History: Registration Date: 15/10/2004

Byline: Michael Carter (1), Julian Wright (1) Keywords: Deregulation; interconnection; networks; telecommunications Abstract: Recent deregulation of telecommunications in the U.S. 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 mature industry as well as one where a new entrant challenges the incumbent. In the later case, network externalities allow the incumbent to use the terms of interconnection to maintain its dominant position. Moreover, in either case, competition in the retail market can be undermined by collusion over access prices. We discuss the implications for some of the provisions of the new U.S. Telecommunications Act, specifically mandatory interconnection and reciprocity of tariffs, comparing these to the simple 'bill and keep' rule. Author Affiliation: (1) Department of Economics, University of Canterbury, Private Bag 4800, Christchurch, New Zealand Article History: Registration Date: 15/10/2004

A study has been made of the New Zealand public debt and of whether it should be denominated in domestic or foreign currencies. All net public debt is now in New Zealand dollars. An optimal debt portfolio should not have any nominal domestic debt. The dominance of demand or supply shocks is susceptible to the economic environment at any given time. More study will be needed to see effects of New Zealand's new economic environment on its public debt portfolio., This paper addresses the issue of whether New Zealand's public debt obligations should be denominated in domestic or foreign currency. Using the tax-smoothing approach of Bohn (1990), we estimate optimal [...]

This paper tests the rational expectations theory of the term structure using recent daily, weekly, and monthly observations on New Zealand interest rates. We find that for many maturities we cannot reject the expectations hypothesis using both short and long versions of the theory. These results are interpreted as further evidence that the failure of the expectations hypothesis in the United States is due to the specific interest rate smoothing behaviour of the Federal Reserve., 1. Introduction The rational expectations hypothesis of the term structure is one of the fundamental building blocks of financial and macroeconomic theory. It has important implications for predicting future movements [...]

Research is presented concerning the implementation of monetary policy through the statements of central banks rather than through open market operations. The monetary policy of New Zealand is discussed.

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1468-0297.2009.02276.x Byline: Mark Armstrong (1), Julian Wright (2) Abstract: We analyse charges levied by mobile telephone networks to deliver calls. We integrate two literatures: one analysing calls from the fixed network, where predicted unregulated termination charges are too high, and one analysing calls from rival mobile networks, where predicted charges are too low. In practice, however, networks adopt uniform charges for terminating both kinds of traffic, as do regulators. We show how incorporating wholesale arbitrage and demand-side substitution helps to reconcile theory with practice. In our framework, the unregulated charge is uniform and typically lies between the efficient and monopoly benchmarks. There remains a rationale for regulation, albeit reduced. Author Affiliation: (1)University College London (2)National University of Singapore