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 illustr ating the effects of vertical mergers, under symbiotic production condition s, when vertically integrated and unintegrated carriers coexist. The effect of competition is analysed both in the final market and in the intermediat e one where carriers compete over tariffs to get an appropriate distributio n of profits. In particular, the results show the relations between final m arket prices, intermediate tariffs and market dimensions and their implicat ions on profits.