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Regulating prices in two-sided markets: The waterbed experience in mobile telephony

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  • Genakos, Christos
  • Valletti, Tommaso

Abstract

The distinguishing feature of two-sided markets is that the pricing structure, that is, the relative prices charged to each side, matters. Regulators need to understand and account for the interdependence of prices in both sides. Some interventions that lower the prices on one side can result in higher prices on the other side of such markets. This article reviews the recent literature analyzing this waterbed phenomenon in mobile telephony and draws some more general lessons for policy interventions in two-sided markets.

Suggested Citation

  • Genakos, Christos & Valletti, Tommaso, 2012. "Regulating prices in two-sided markets: The waterbed experience in mobile telephony," Telecommunications Policy, Elsevier, vol. 36(5), pages 360-368.
  • Handle: RePEc:eee:telpol:v:36:y:2012:i:5:p:360-368
    DOI: 10.1016/j.telpol.2011.12.014
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    References listed on IDEAS

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    1. Dewenter, Ralf & Kruse, Jörn, 2011. "Calling party pays or receiving party pays? The diffusion of mobile telephony with endogenous regulation," Information Economics and Policy, Elsevier, vol. 23(1), pages 107-117, March.
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    4. Peitz, Martin & Valletti, Tommaso M. & Wright, Julian, 2004. "Competition in telecommunications: an introduction," Information Economics and Policy, Elsevier, vol. 16(3), pages 315-321, September.
    5. Mark Armstrong & Julian Wright, 2009. "Mobile Call Termination," Economic Journal, Royal Economic Society, vol. 119(538), pages 270-307, June.
    6. Robin Mason & Tommaso M. Valletti, 2001. "Competition in Communication Networks: Pricing and Regulation," Oxford Review of Economic Policy, Oxford University Press, vol. 17(3), pages 389-415.
    7. Duso, Tomaso & Roller, Lars-Hendrik, 2003. "Endogenous deregulation: evidence from OECD countries," Economics Letters, Elsevier, vol. 81(1), pages 67-71, October.
    8. Hoernig, Steffen, 2014. "Competition between multiple asymmetric networks: Theory and applications," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 57-69.
    9. Jullien, Bruno & Rey, Patrick & Sand-Zantman, Wilfried, 2009. "Mobile Call Termination Revisited," TSE Working Papers 10-198, Toulouse School of Economics (TSE), revised Aug 2010.
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    11. Wright, Julian, 2002. "Access Pricing under Competition: An Application to Cellular Networks," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 289-315, September.
    12. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-564, May.
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    Citations

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    Cited by:

    1. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    2. I. Vogelsang, 2015. "Will the U.S. and EU telecommunications policies converge? A survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 117-155, June.
    3. repec:kap:revind:v:50:y:2017:i:4:d:10.1007_s11151-016-9554-8 is not listed on IDEAS
    4. repec:eee:telpol:v:42:y:2018:i:5:p:374-385 is not listed on IDEAS
    5. Roger Noll, 2013. "Assessing Telecommunications Policy in Mexico," Discussion Papers 12-030, Stanford Institute for Economic Policy Research.
    6. Lee, Dongyeol, 2015. "Regulating termination charges in asymmetric oligopolies," Information Economics and Policy, Elsevier, vol. 32(C), pages 16-28.
    7. Stork, Christoph & Gillwald, Alison, 2014. "Link between termination rates and retail prices in Namibia, Kenya and South Africa," Telecommunications Policy, Elsevier, vol. 38(8), pages 783-797.

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