Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75795
Authors: 
Reutter, Michael
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper 480
Abstract: 
We explain the recent events in the German market for online access using a model of a regulated monopoly renting phone lines to retailers. Retailers offer either a linear or a flat tariff to consumers. Consumer heterogeneity leads to adverse selectiion. We show why market entry for flatrate firms is difficult under a linear wholesale tariff. With both a linear and a flat wholesale tariff the consumer market shows a mixture of tariffs as well. When marginal costs are zero it is optimal to have a wholesale flatrate only. However, marginal moves towards this equilibrium are not always welfare improving.
Subjects: 
Internet
flatrate
adverse selection
Document Type: 
Working Paper

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