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Mobile Telephony in Emerging Markets: The Importance of Dual-SIM Phones

Author

Listed:
  • Andersson Kjetil
  • Göller Daniel

    (University of Agder, School of Business and Law, Department of Economics and Finance, Universitetsveien 19, N-4630Kristiansand, Norway)

Abstract

A substantial share of customers in emerging markets use dual-SIM phones and subscribe to two mobile networks. A primary motive for so called multi-simming is to take advantage of cheap on-net services from both networks. In our modelling effort, we augment the seminal model of competing telephone networks á la Laffont, Rey and Tirole (1998b) by a segment of flexible price hunters that may choose to multi-sim. According to our findings, in equilibrium, the networks set a high off-net price in the linear tariffs to achieve segmentation. This induces the price hunters to multi-sim. We show that increased deployment of dual-SIM phones may induce a mixing equilibrium with high expected on-net prices. Thus, somewhat paradoxically, deployment of a technology that increases substitutability, and thereby competition, may end up raising prices.

Suggested Citation

  • Andersson Kjetil & Göller Daniel, 2020. "Mobile Telephony in Emerging Markets: The Importance of Dual-SIM Phones," Review of Network Economics, De Gruyter, vol. 19(3), pages 189-219, September.
    • Handle: RePEc:bpj:rneart:v:19:y:2020:i:3:p:189-219:n:2
    DOI: 10.1515/rne-2020-0040
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    More about this item

    Keywords

    network competition; multi-sim; dual-SIM phones; price discrimination;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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