IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v35y2011i4p325-332.html
   My bibliography  Save this article

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

Author

Listed:
  • 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 it is demonstrated 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. The paper also discusses the implications that such a consumer bias may have for market competition.

Suggested Citation

  • Haucap, Justus & Heimeshoff, Ulrich, 2011. "Consumer behavior towards on-net/off-net price differentiation," Telecommunications Policy, Elsevier, vol. 35(4), pages 325-332, May.
  • Handle: RePEc:eee:telpol:v:35:y:2011:i:4:p:325-332
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596111000176
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Barth, Anne-Kathrin & Graf, Julia, 2011. "Irrationality rings! - Experimental evidence on mobile tariff choices," DICE Discussion Papers 36, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    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, 2010. "Eingeschränkte Rationalität in der Wettbewerbsökonomie," DICE Ordnungspolitische Perspektiven 08, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    4. Gu, Yiquan & Wenzel, Tobias, 2012. "Transparency, entry, and productivity," Economics Letters, Elsevier, vol. 115(1), pages 7-10.
    5. Haucap, Justus & Heimeshoff, Ulrich & Lange, Mirjam R. J., 2014. "The impact of tariff diversity on broadband diffusion: An empirical analysis," 25th European Regional ITS Conference, Brussels 2014 101403, International Telecommunications Society (ITS).
    6. Haucap, Justus & Herr, Annika & Frank, Björn, 2011. "In vino veritas: Theory and evidence on social drinking," DICE Discussion Papers 37, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Clémence Christin, 2013. "Entry Deterrence Through Cooperative R&D Over-Investment," Recherches économiques de Louvain, De Boeck Université, vol. 79(2), pages 5-26.
    8. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, vol. 11(2), pages 1-23, June.
    9. Mwakatumbula, Hilda J. & Moshi, GoodielC. & Mitomo, Hitoshi, 2015. "Consumer Awareness And Protection In Telecommunication Markets: Case Of Tanzania; Determinant Of Consumers’ Knowledge On Their Rights," 26th European Regional ITS Conference, Madrid 2015 127161, International Telecommunications Society (ITS).
    10. repec:lmu:msmdpa:12688 is not listed on IDEAS
    11. Orhan Dagli & Glenn P. Jenkins, 2015. "Consumer Preferences for Improvements in Mobile Telecommunication Services," Development Discussion Papers 2015-05, JDI Executive Programs.
    12. 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).
    13. Karacuka, Mehmet & Çatık, A. Nazif & Haucap, Justus, 2013. "Consumer choice and local network effects in mobile telecommunications in Turkey," Telecommunications Policy, Elsevier, vol. 37(4), pages 334-344.
    14. Muck, Johannes, 2016. "Tariff-mediated network effects with incompletely informed consumers," DICE Discussion Papers 210, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-mediated network effects versus strategic discounting: Evidence from German mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 751-759.
    16. Mehmet Karacuka & Asad Zaman, 2012. "The empirical evidence against neoclassical utility theory: a review of the literature," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 3(4), pages 366-414.
    17. repec:lmu:msmdpa:13764 is not listed on IDEAS

    More about this item

    Keywords

    Mobile telecommunications Price discrimination;

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:telpol:v:35:y:2011:i:4:p:325-332. 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: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.