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Consumer behavior towards on-net/off-net price differentiation

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  • Haucap, Justus
  • Heimeshoff, Ulrich

Abstract

This paper explores how consumers react towards price differentiation between on-net and off-net calls in mobile telecommunications - a pricing policy that is common in many mobile telecommunications markets. Based on a survey of 1044 students we demonstrate that some consumers may suffer from a 'price differentiation bias', i.e., a fair number of consumers may overestimate the savings that result from reduced on-net and/or off-net charges, as they do not appear to weigh the prices with the probabilities of placing off-net and on-net calls. This may help to explain why it have been the smaller operators in various countries who have introduced on-net/off-net price differentiation. We also discuss the implications that such a consumer bias may have for market competition. --

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Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 16.

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Date of creation: 2011
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Handle: RePEc:zbw:dicedp:16

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Cited by:
  1. Muck, Johannes, 2012. "The effect of on-net / off-net differentiation and heterogeneuous consumers on network size in mobile telecommunications : an agent-based aporoach," 23rd European Regional ITS Conference, Vienna 2012 60355, International Telecommunications Society (ITS).
  2. Muck, Johannes, 2012. "The Effect of On-net/Off-net Differentiation and Heterogeneous Consumers on Network Size in Mobile Telecommunications – An Agent-based Approach," 19th ITS Biennial Conference, Bangkok 2012: Moving Forward with Future Technologies - Opening a Platform for All 72477, International Telecommunications Society (ITS).
  3. Haucap, Justus & Heimeshoff, Ulrich & Lange, Mirjam R. J., 2014. "The impact of tariff diversity on broadband diffusion: An empirical analysis," DICE Discussion Papers 156, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  4. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, De Gruyter, vol. 11(2), pages 1-23, June.
  5. Barth, Anne-Kathrin & Graf, Julia, 2012. "Irrationality rings!: Experimental evidence on mobile tariff choices," 23rd European Regional ITS Conference, Vienna 2012 60376, International Telecommunications Society (ITS).
  6. Christin, Clémence, 2011. "Entry deterrence through cooperative R&D over-investment," DICE Discussion Papers 38, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  7. repec:lmu:msmdpa:12688 is not listed on IDEAS
  8. Haucap, Justus, 2010. "Eingeschränkte Rationalität in der Wettbewerbsökonomie," DICE Ordnungspolitische Perspektiven 08, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  9. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-Mediated Network Effects versus Strategic Discounting: Evidence from German Mobile Telecommunications," Discussion Papers in Business Administration, University of Munich, Munich School of Management 14848, University of Munich, Munich School of Management.
  10. Gu, Yiquan & Wenzel, Tobias, 2011. "Transparency, entry, and productivity," DICE Discussion Papers 39, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  11. Karaçuka, Mehmet & Çatik, A. Nazif & Haucap, Justus, 2012. "Consumer choice and local network effects in mobile telecommunications in Turkey," DICE Discussion Papers 70, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  12. Haucap, Justus & Herr, Annika & Frank, Björn, 2011. "In vino veritas: Theory and evidence on social drinking," DICE Discussion Papers 37, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  13. repec:lmu:msmdpa:13764 is not listed on IDEAS

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