IDEAS home Printed from https://ideas.repec.org/a/spr/binfse/v1y2009i4p289-300.html
   My bibliography  Save this article

Simulating Discount-Pricing Strategies for the GSM-Mobile Market

Author

Listed:
  • Sven Schade
  • Thorsten Frey
  • Nezar Mahmoud

Abstract

The article analyzes network effects on the German GSM mobile telephony market. The authors use an ACE-approach to examine how a new competitor can successfully gain ground in the market with a discount-pricing strategy. In particular they study the impact of several elements of a mobile phone contract like on-net-, landline- or off-net-fees on the competitor’s market share. It turns out that it is possible to successfully enter the market with a prepaid contract using a discount-pricing strategy where the single fees only marginally exceed the termination rates, which have to be transferred to foreign network operators. Copyright Gabler Verlag 2009

Suggested Citation

  • Sven Schade & Thorsten Frey & Nezar Mahmoud, 2009. "Simulating Discount-Pricing Strategies for the GSM-Mobile Market," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 1(4), pages 289-300, August.
    • Handle: RePEc:spr:binfse:v:1:y:2009:i:4:p:289-300
    DOI: 10.1007/s12599-009-0057-0
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s12599-009-0057-0
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s12599-009-0057-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

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

    References listed on IDEAS

    as
    1. Doganoglu, Toker & Grzybowski, Lukasz, 2007. "Estimating network effects in mobile telephony in Germany," Information Economics and Policy, Elsevier, vol. 19(1), pages 65-79, March.
    2. Michal Grajek, 2003. "Estimating Network Effects and Compatibility in Mobile Telecommunications," CIG Working Papers SP II 2003-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    3. Heli Koski & Tobias Kretschmer, 2004. "Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(1), pages 89-113, November.
    4. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 1-25, February.
    5. Buxmann, Peter, 2002. "Strategien von Standardsoftware-Anbietern: Eine Analyse auf der Basis von Netzeffekten," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 35816, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    6. Gandal, Neil & Church, Jeffrey, 2004. "Platform Competition in Telecommunications," CEPR Discussion Papers 4659, C.E.P.R. Discussion Papers.
    7. Blonski, Matthias, 2002. "Network externalities and two-part tariffs in telecommunication markets," Information Economics and Policy, Elsevier, vol. 14(1), pages 95-109, March.
    8. Heli Koski & Tobias Kretschmer, 2004. "Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(1), pages 89-113, November.
    9. Heli Koski & Tobias Kretschmer, 2004. "Survey on Competing in Network Industries: Firm Strategies, Market Outcomes, and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 5-31, March.
    10. Kruse, Joern, 2003. "Regulierung der Terminierungsentgelte der deutschen Mobilfunknetze?," Working Paper 1/2003, Helmut Schmidt University, Hamburg.
    11. Kruse, Jörn, 2003. "Regulierung der Terminierungsentgelte der deutschen Mobilfunknetze?," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW - Leibniz Information Centre for Economics, vol. 83(3), pages 203-208.
    12. Pio Baake & Georg Erber & Sven Heitzler & Christian Wey & Barbara van Schewick & Adam Wolisz & Harald Hagemann, 2007. "Die Rolle staatlicher Akteure bei der Weiterentwicklung von Technologien in deregulierten TK-Märkten," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, volume 27, number pbk27, Enero-Abr.
    13. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-841, August.
    14. Kim, Moon-Koo & Park, Myeong-Cheol & Jeong, Dong-Heon, 2004. "The effects of customer satisfaction and switching barrier on customer loyalty in Korean mobile telecommunication services," Telecommunications Policy, Elsevier, vol. 28(2), pages 145-159, March.
    15. Bolle Friedel & Heimel Jana, 2005. "A Fallacy of Dominant Price Vectors in Network Industries," Review of Network Economics, De Gruyter, vol. 4(3), pages 1-8, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Torsten Gerpott & Sabrina Berg, 2011. "Determinants of the Willingness to Use Mobile Location-Based Services," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 3(5), pages 279-287, October.
    2. Andreas Deckert & Robert Klein, 2014. "Simulation-based optimization of an agent-based simulation," Netnomics, Springer, vol. 15(1), pages 33-56, July.
    3. Muck, Johannes, 2016. "Tariff-mediated network effects with incompletely informed consumers," DICE Discussion Papers 210, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    4. Marcel Fritz & Christian Schlereth & Stefan Figge, 2011. "Empirical Evaluation of Fair Use Flat Rate Strategies for Mobile Internet," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 3(5), pages 269-277, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Birke, 2009. "The Economics Of Networks: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 762-793, September.
    2. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    3. 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.
    4. Grajek, Michal & Kretschmer, Tobias, 2009. "Usage and diffusion of cellular telephony, 1998-2004," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 238-249, March.
    5. Michal Grajek, 2003. "Estimating Network Effects and Compatibility in Mobile Telecommunications," CIG Working Papers SP II 2003-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    6. Grajek, Michal, 2010. "Estimating network effects and compatibility: Evidence from the Polish mobile market," Information Economics and Policy, Elsevier, vol. 22(2), pages 130-143, May.
    7. Heli Koski & Tobias Kretschmer, 2004. "Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(1), pages 89-113, November.
    8. Heli Koski & Tobias Kretschmer, 2007. "Innovation and Dominant Design in Mobile Telephony," Industry and Innovation, Taylor & Francis Journals, vol. 14(3), pages 305-324.
    9. Leonhard Dobusch & Elke Schüßler, 2013. "Theorizing path dependence: a review of positive feedback mechanisms in technology markets, regional clusters, and organizations," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(3), pages 617-647, June.
    10. Michal Grajek & Tobias Kretschmer, 2008. "Estimating critical mass in the global cellular telephony market," ESMT Research Working Papers ESMT-08-004 (R1), ESMT European School of Management and Technology, revised 15 Apr 2010.
    11. Laura Rinaldi, 2008. "Estimation of network externalities and critical mass in the mobile telephone market: a panel data analysis of the OECD countries," Working Papers 1_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    12. Xiong, Hang & Payne, Diane & Kinsella, Stephen, 2016. "Peer effects in the diffusion of innovations: Theory and simulation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 1-13.
    13. Alex Bryson & Rafael Gomez & Tobias Kretschmer, 2005. "Catching a Wave: the Adoption of Voice and High Commitment Workplace Practices in Britain: 1984-1998," CEP Discussion Papers dp0676, Centre for Economic Performance, LSE.
    14. Dejan Trifunović & Đorđe Mitrović, 2016. "Price Discrimination, Entry, And Switching Costs In Network Competition," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 61(209), pages 129-160, April - J.
    15. Coenen, Michael & Haucap, Justus, 2012. "Ökonomische Grundlagen der Anreizregulierung," DICE Ordnungspolitische Perspektiven 35, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    16. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    17. Czajkowski, Mikołaj & Sobolewski, Maciej, 2016. "How much do switching costs and local network effects contribute to consumer lock-in in mobile telephony?," Telecommunications Policy, Elsevier, vol. 40(9), pages 855-869.
    18. Sung, Nakil & Kwon, Mi-ae, 2011. "An empirical analysis of the state of competition in OECD mobile wireless markets," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52204, International Telecommunications Society (ITS).
    19. Nina Czernich & Oliver Falck & Tobias Kretschmer & Ludger Woessmann, 2011. "Broadband Infrastructure and Economic Growth," Economic Journal, Royal Economic Society, vol. 121(552), pages 505-532, May.
    20. Jiawei Chen & Ulrich Doraszelski & Joseph E. Harrington, Jr., 2009. "Avoiding market dominance: product compatibility in markets with network effects," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 455-485, September.

    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:spr:binfse:v:1:y:2009:i:4:p:289-300. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.