Synopsis
This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1882 Excerpt: ...Y and the PTT. As long as the PTT does not seek to use the agreement with X to extract concessions from Y, whipsawing would not occur. In addition, the United States may be better off with the nonuniform rate because the gain in consumer surplus caused by the entry of X could more than offset the loss of producer surplus to the PTT. Indeed, if the goal is to adopt accounting rates that reflect costs of network usage as noted in Sec. IV, where these costs vary among countries, nonuniform accounting rates with modifications from the 50/50 split would be appropriate. Gains to PTTs Without Whipsawing Even if the PTT does not explicitly play off one U.S. carrier against another, it is in a strong position to extract concessions from competing U.S. carriers. As just one possibility, to compensate the PTT for the burden of dealing with an additional carrier, X offers to cover the cost of modifying the PTT's software, switching, and such. The PTT agrees but only under terms of compensation that far exceed the additional costs. Even after the agreement is signed, the PTT might threaten to terminate it to gain continuing concessions from X. More generally, the PTT may allow entry to additional U.S. carriers and then reap the benefit of the additional incoming traffic stimulated by their competitive reductions in collection rates. By maintaining high accounting rates in the face of falling costs, the PTT, in effect, imposes progressively higher "taxes" on the U.S. carriers for access to its network. Reductions in collection rates benefit U.S. consumers, but the PTT gains producer surplus at the expense of U.S. carriers. In response to reductions in U.S. collection rates, the PTT may be willing to reduce its accounting rates--but only by a smaller percentage....
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