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Empirical evidence on the relationship between mobile termination rates and firms’ profit

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Author Info

  • Andersson, Kjetil

    ()
    (Dept. of Economics and Business Administration, University of Agder)

  • Foros, Øystein

    ()
    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

  • Hansen, Bjørn

    ()
    (Telenor Research and Innovation (R&I))

Abstract

The comprehensive theoretical literature on mobile termination rates (MTRs) is inconclusive on how the level of MTRs affects overall consumer charges and firms’ profit. In a theoretical model, well suited for econometric implementation, we show that where consumers buy a bundle with included usage, as we now observe in the market, the level of MTRs has no impact on retail prices and firms’ profit. We use a panel data set from saturated European markets and find that an identical change in MTRs does not have a significant impact on firms’ profit.

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Bibliographic Info

Paper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2012/10.

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Length: 28 pages
Date of creation: 28 Aug 2012
Date of revision:
Handle: RePEc:hhs:nhhfms:2012_010

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Postal: NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
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Fax: +47 55 95 96 50
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Web page: http://www.nhh.no/en/research-faculty/department-of-business-and-management-science.aspx
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Keywords: Mobile termination rates; consumer charges; firms’ profit;

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