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Evaluating the Impact of Price Caps - Evidence from the European Roam-Like-at-Home Regulation

Author

Listed:
  • Verboven, Frank
  • Canzian, Giulia
  • Mazzarella, Gianluca
  • Ranchail, Louis
  • Verzillo, Stefano

Abstract

The roam-like-at-home regulation (RLAH) eliminated all mobile roaming surcharges to European consumers travelling within the European Economic Area (EEA). We measure the causal impact of the regulation on EEA roaming traffic, using the Rest of the World as a control group. We find large and heterogeneous effects on retail and wholesale traffic volumes and revenues. To evaluate the welfare effects of the regulation, we develop a framework that includes consumer surplus, retail and wholesale profits. The gains in consumer surplus are large, and mainly stem from data services. The consumer gains are proportionately larger in small, open economies and in countries with previously high roaming prices. Finally, total welfare increases considerably, because the consumer surplus gains far outweigh profit losses. As such, the removal of market power more than compensates for a distortion from a possible overconsumption at zero surcharges.

Suggested Citation

  • Verboven, Frank & Canzian, Giulia & Mazzarella, Gianluca & Ranchail, Louis & Verzillo, Stefano, 2021. "Evaluating the Impact of Price Caps - Evidence from the European Roam-Like-at-Home Regulation," CEPR Discussion Papers 16554, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16554
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    Cited by:

    1. Muñoz-Acevedo, Ángela & Grzybowski, Lukasz, 2023. "Impact of roaming regulation on revenues and prices of mobile operators in the EU," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    2. Jack (Peiyao) Ma & Andrea Mantovani & Carlo Reggiani & Annette Broocks & Néstor Duch-Brown, 2024. "The Price Effects of Prohibiting Price Parity Clauses: Evidence from International Hotel Groups," Economics Series Working Papers 1043, University of Oxford, Department of Economics.
    3. Martin Quinn & Miguel Godinho de Matos & Christian Peukert, 2024. "The Welfare Effects of Mobile Internet Access: Evidence from Roam-Like-at-Home," The Economic Journal, Royal Economic Society, vol. 134(659), pages 1228-1246.

    More about this item

    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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