Entry in telecommunication: customer loyalty, price sensitivity and access prices
The purpose of this article is to investigate the prospects for entry into an existing network in the telecommunication industry, and how public policy may promote a more competitive outcome. We apply a model that captures the fact that the incumbent has an installed base of loyal consumers, some consumers are price sensitive, and the entrant is charged an access fee for entering the network. We distinguish between classical (de novo) entry and reciprocal entry (incumbent entering the neighbouring market), and analyse how such public policy measures as (i) publication of prices by the authorities and (ii) lower access fees affect the competitive outcome. In the reciprocal entry model we find that lower access fees tend to discourage entry into a neighbouring market, while the publishing of prices has an ambiguous effect on entry.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
- Gianni De Fraja, .
"Regulation and Access Pricing with Asymmetric Information,"
95/5, Department of Economics, University of York.
- De Fraja, Gianni, 1999. "Regulation and access pricing with asymmetric information," European Economic Review, Elsevier, vol. 43(1), pages 109-134, January.
- De Fraja, Gianni, 1995. "Regulation and Access Pricing with Asymmetric Information," CEPR Discussion Papers 1122, C.E.P.R. Discussion Papers.
- Fudenberg, Drew & Tirole, Jean, 1984. "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review, American Economic Association, vol. 74(2), pages 361-66, May.
- Schmalensee, Richard, 1983. "Advertising and Entry Deterrence: An Exploratory Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 636-53, August.
- Allen, Beth & Thisse, Jacques-Francois, 1992.
"Price Equilibria in Pure Strategies for Homogeneous Oligopoly,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 1(1), pages 63-81, Spring.
- ALLEN, Beth & THISSE, Jacques, 1990. "Price equilibria in pure strategies for homogeneous oligopoly," CORE Discussion Papers 1990034, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Albaek, Svend & Mollgaard, Peter & Overgaard, Per B, 1997.
"Government-Assisted Oligopoly Coordination? A Concrete Case,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 45(4), pages 429-43, December.
- Svend Albæk & Peter Møllgaard & Per Baltzer Overgaard, 1997. "Government-Assisted Oligopoly Coordination? A Concrete Case," CIE Discussion Papers 1997-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- H. Peter Møllgaard & Per Baltzer Overgaard, 1999. "Market Transparency: A Mixed Blessing?," CIE Discussion Papers 1999-15, University of Copenhagen. Department of Economics. Centre for Industrial Economics, revised Feb 2000.
- Nilsson, Arvid, 1999. "Transparency and Competition," SSE/EFI Working Paper Series in Economics and Finance 298, Stockholm School of Economics, revised 29 Nov 1999.
- Grossman, Gene M & Shapiro, Carl, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 63-81, January.
- Christian Schultz, 2001. "Transparency and Tacit Collusion," CIE Discussion Papers 2001-04, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Ruqu Wang & Quan Wen, 1998. "Strategic Invasion in Markets with Switching Costs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(4), pages 521-549, December.
- Lommerud, Kjell Erik & Sorgard, Lars, 2001.
"Trade Liberalization and Cartel Stability,"
Review of International Economics,
Wiley Blackwell, vol. 9(2), pages 343-55, May.
- Lommerund, K.E. & Sorgard, L., 1998. "Trade Liberalization and Cartel Stability," Norway; Department of Economics, University of Bergen 0198, Department of Economics, University of Bergen.
- Klemperer, Paul D, 1987. "Entry Deterrence in Markets with Consumer Switching Costs," Economic Journal, Royal Economic Society, vol. 97(388a), pages 99-117, Supplemen.
When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:15:y:2003:i:1:p:55-72. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.