Market Penetration and Late Entry in Mobile Telephony
AbstractWe consider some two dynamic models of entry in mobile telephony, with and without strategic pricing, and taking into account market penetration at entry, locked-in consumers and tariff-mediated network externalities. We show that on/off-net differentials may reduce the possibility of entry if incumbents are large, while they have no long-run effects if there are no locked-in consumers, or reduce the difference in subscriber numbers in their presence. Asymmetric fixed-to-mobile or mobile-to-mobile termination rates increase (decrease) market share and profit of the network with the higher (lower) rate. While the fixed-to-mobile waterbed effect is not full at the network level, it will be full in the aggregate.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 08-38.
Length: 28 pages
Date of creation: Oct 2008
Date of revision: Oct 2008
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Web page: http://www.NETinst.org/
Mobile Telephony; Entry; Penetration; Mobile termination rates;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-04 (All new papers)
- NEP-COM-2008-11-04 (Industrial Competition)
- NEP-IND-2008-11-04 (Industrial Organization)
- NEP-MIC-2008-11-04 (Microeconomics)
- NEP-NET-2008-11-04 (Network Economics)
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- Harbord, David & Hoernig, Steffen, 2010.
"Welfare Analysis of Regulating Mobile Termination Rates in the UK (with an Application to the Orange/T-Mobile Merger),"
21515, University Library of Munich, Germany.
- Harbord, David & Hoernig, Steffen, 2010. "Welfare Analysis of Regulating Mobile Termination Rates in the UK (with an Application to the Orange/T-Mobile Merger)," CEPR Discussion Papers 7730, C.E.P.R. Discussion Papers.
- David Harbord & Steffen Hoernig, 2012. "Welfare Analysis of Regulating Mobile Termination Rates in the UK with an Application to the Orange/T-Mobile Merger," FEUNL Working Paper Series wp571, Universidade Nova de Lisboa, Faculdade de Economia.
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