theaccessfee,sincethe xedfeehasnoimpactondemand.Inequilibrium,theusagefeeistheperceivedmarginalcostofeachnetwork,andthesubscriptionfeeequalsthemarginalcostofaddingacustomerplusamarkupre ectingsubstitutability.Moreimportantly,theequilibriumpro tisindependentoftheaccesscharge.Thus,theaccesschargecreatesnoincentivetocolludeanditiseasytosetitatthesociallye cientlevel,i.e.,themarginalcostofprovidingaccess.

ThesecondpaperbyLRTallowspricediscriminationoveron-net(withinanet-work)ando -net(across-network)calls.Iftheaccesschargeisdi erentfromthemarginalcostofprovidingaccess,callsindi erentdirectionshavedi workoperatorshavetheincentivetochargedi erentlyoverthetwotypesofcalls.Ahigheraccesschargeleadstoahighero -netprice,butalsoindi-rectlydecreasestheon-netprice.The nale ectofanincreaseinaccesschargewouldbealoweraveragepriceandpro t.Asnotedbytheauthors,“thewedgebetweenon-netando -netpricesisdetrimentaltoconsumptione ciency,butmayintensifycompetition,withambiguouswelfaree ects.”Highaccesschargesarethereforenotnecessarilyacollusivedevice.9

3.3.CreditCardPaymentSystems.Thecreditcardpaymentindustryex-hibitsstrongdemandcomplementarity.Atypicalcreditcardpaymenttransactioninvolvesfourparties:aconsumerandamerchant,eachdealingwitha nancialinstitution.Themerchant’s nancialinstitution(mostlybanks)isreferredtoas“acquirer”andprovidesafacilitytoperformthetransaction.Theconsumer’sbankisthe“issuer”andendowstheconsumerwithacardtoinitiatethesetransactions.Theissuerandacquirermustcooperatetoprocessatransactionandexchangeaninterchangefeewhendoingso.ThedominantcreditcardsystemsareVisaandMasterCard,eachofwhichisanassociationofissuersandacquirerswithopenmem-bership.10Theassociationshavedesignedasetofrulestogoverntheinteractionamongmemberbanksandparticularlyimposeauniforminterchangefee.Thejointdeterminationofinterchangefeeshasgeneratedcontroversyandbeenthefocusoftheeconomicanalysisofthisindustry.

Thereareseveralextensions.Byintroducingconsumersheterogeneity,Dessein(2003)showsthatthepro tneutrality(withrespecttoaccesscharge)undertwo-parttari fails.Thewelfare-optimalaccesschargeisabovethemarginalcost.Inthecontextofasymmetricnetworks,CarterandWright(2003) ndthatitise cienttohavethelargenetworktochoosethereciprocalaccesscharge.Jeon,La ontandTirole(2004)allowreceiverstoderivebene tsfromreceivingcallsanda ectthevolumeofcommunicationsbyhangingup.Whenreceptionchargesaremarket-determined,eachnetworkoperator ndsitoptimaltosetthepricesforcallingandreceptionatitso -netcosts.Thesymmetricequilibriumise cientforanappropriatechoiceofterminationcharge.

10Thereisanothersysteminwhichtheownerofthesystemistheonlyissueroftheassociatedcreditcards;thetwoexamplesareAmericanExpressandDiscover.9