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Competition vs. Regulation in Mobile Telecommunications

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  • Stennek, Johan
  • Tangerås, Thomas P.

Abstract

This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome prevails independently of market concentration when access prices are determined in bilateral negotiations. A light-handed regulatory policy can induce effective competition. Call prices are close to the marginal cost if the networks are sufficiently close substitutes. Neither demand nor cost information is required. A unique and symmetric call price equilibrium exists under symmetric access prices, provided that call demand is sufficiently inelastic. Existence encompasses the case of many networks and high network substitutability.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6073.

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Date of creation: Feb 2007
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Handle: RePEc:cpr:ceprdp:6073

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Keywords: access price competition; entry; network competition; network substitutability; regulation; two-way access;

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References

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