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Competition with asymmetric regulation of mobile termination charges

Author

Listed:
  • Edmond Baranes

    (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)

  • Cuong Hung Vuong

Abstract

The aim of this paper is to explore the effectiveness of asymmetric regulation, which allows a new mobile network operator to set higher termination rates than the incumbent operator. We assume that there are two market segments: one in which operators compete on equal terms, with a new technology, and the other in which the entrant is at a disadvantage since the technology it offers is inferior to the incumbent's. Results show that asymmetric regulation can create favorable conditions that allow the entrant to strengthen its market positioning, and enhance consumer net utilities and social welfare. This highlights the importance of the degree of network asymmetry and the ways in which consumers are split between the two market segments. Lastly, we show that asymmetric regulation can create greater investment incentives for the entrant which could effectively enhance social welfare. These findings can provide useful insights for regulatory policy.

Suggested Citation

  • Edmond Baranes & Cuong Hung Vuong, 2012. "Competition with asymmetric regulation of mobile termination charges," Post-Print hal-01830036, HAL.
    • Handle: RePEc:hal:journl:hal-01830036
    DOI: 10.1007/s11149-011-9171-2
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    Cited by:

    1. Alexander Correa, 2019. "Asymmetric Networks and Access Charges," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-22, February.

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