Termination fees revisited

Bruno Jullien, Patrick Rey, and Wilfried Sand-Zantman


We reconsider the question of the optimal level of termination fees between communication networks in the context of heterogeneous usage and elastic participation. The interaction between these two features yields new insights; in our model: i) The profit maximizing reciprocal termination fee is above marginal cost; ii) the welfare maximizing termination fee is also above cost; iii) the welfare-maximizing termination fee is below the profit-maximizing one in the absence of termination-based price discrimination, but can be above it otherwise.


Termination fee; Communication; Network; Mobile;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L51: Economics of Regulation
  • L96: Telecommunications

See also

Published in

International Journal of Industrial Organization, vol. 31, n. 6, November 2013, pp. 738–750