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The Economic Impact of Wireless Number Portability

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  • Minjung Park

Abstract

This paper examines the price response of wireless carriers to the introduction of number portability. My main empirical finding is that wireless prices decreased in response to number portability, but not uniformly across all plans. Average prices for the plans with the fewest minutes decreased by only $0.5/month, but average prices for plans with intermediate and large numbers of minutes decreased by $3.3/month and $8.0/month, respectively. Resulting welfare gains to wireless consumers are large. This paper studies several explanations for the heterogeneous impact of number portability. My analysis suggests that wireless carriers engaged in price discrimination against consumer groups with high switching costs. The results of this paper suggest that even in fairly competitive markets, switching costs can confer considerable market power upon firms and firms can engage in price discrimination based on heterogeneous switching costs.
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  • Minjung Park, 2011. "The Economic Impact of Wireless Number Portability," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 714-745, December.
  • Handle: RePEc:bla:jindec:v:59:y:2011:i:4:p:714-745
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    Cited by:

    1. Colombo, Stefano, 2015. "Should a firm engage in behaviour-based price discrimination when facing a price discriminating rival? A game-theory analysis," Information Economics and Policy, Elsevier, vol. 30(C), pages 6-18.
    2. Michael D. Grubb & Matthew Osborne, 2015. "Cellular Service Demand: Biased Beliefs, Learning, and Bill Shock," American Economic Review, American Economic Association, vol. 105(1), pages 234-271, January.
    3. Michael Grubb, 2015. "Failing to Choose the Best Price: Theory, Evidence, and Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 303-340, November.
    4. Jiawei Chen & Michael Sacks, 2016. "Reimbursing Consumers' Switching Costs in Network Industries," Working Papers 16-13, NET Institute.
    5. Jiawei Chen-super-†, 2016. "How Do Switching Costs Affect Market Concentration and Prices in Network Industries?," Journal of Industrial Economics, Wiley Blackwell, vol. 64(2), pages 226-254, June.
    6. Pacharasut Sujarittanonta, 2017. "Evaluating mobile number portability policy in the Thai mobile telecommunications market," Journal of Regulatory Economics, Springer, vol. 51(2), pages 220-233, April.
    7. Guy Arie & Paul E. Grieco, 2014. "Who pays for switching costs?," Quantitative Marketing and Economics (QME), Springer, vol. 12(4), pages 379-419, December.
    8. Tingting He & Dmitri Kuksov & Chakravarthi Narasimhan, 2012. "Intraconnectivity and Interconnectivity: When Value Creation May Reduce Profits," Marketing Science, INFORMS, vol. 31(4), pages 587-602, July.
    9. Jorge Ale, 2013. "Switching Costs and Introductory Pricing in the Wireless Service Industry," Working Papers 13-17, NET Institute.
    10. Jiawei Chen, 2009. "Switching Costs and Dynamic Price Competition in Network Industries," Working Papers 09-25, NET Institute, revised Apr 2010.

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