Vertical integration in international telecommunication system

The process of liberalization and privatization is drastically altering the links among international telecommunications carriers. The model presented in this paper analyses the international telecommunications market illustrating the effects of vertical mergers, under symbiotic production conditions, when vertically integrated and unintegrated carriers coexist. The effect of competition is analysed both in the final market and in the intermediate one where carriers compete over tariffs to get an appropriate distribution of profits. In particular, the results show the relations between final market prices, intermediate tariffs and market dimensions and their implications on profits