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Mobile Phone Termination Charges with Asymmetric Regulation

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  • Pio Baake
  • Kay Mitusch

Abstract

We model competition between two unregulated mobile phone companies with price-elastic demand and less than full market coverage. We also assume that there is a regulated full-coverage fixed network. In order to induce stronger competition, mobile companies could have an incentive to raise their reciprocal mobile-to-mobile access charges above the marginal costs of termination. Stronger competition leads to an increase of the mobiles' market shares, with the advantage that (genuine) network effects are strengthened. Therefore, 'collusion' may well be in line with social welfare.

Suggested Citation

  • Pio Baake & Kay Mitusch, 2005. "Mobile Phone Termination Charges with Asymmetric Regulation," Discussion Papers of DIW Berlin 500, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp500
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.43371.de/dp500.pdf
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: II. Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 38-56, Spring.
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    9. Tommaso Valletti & George Houpis, 2005. "Mobile Termination: What is the “Right” Charge?," Journal of Regulatory Economics, Springer, vol. 28(3), pages 235-258, November.
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    Citations

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    Cited by:

    1. Jerry A. Hausman, 2012. "Two-sided Markets with Substitution: Mobile Termination Revisited," Chapters,in: Regulation and the Performance of Communication and Information Networks, chapter 13 Edward Elgar Publishing.
    2. Edmond Baranes & Stefan Behringer & Jean-Christophe Poudou, 2017. "Mobile Access Charges and Collusion under Asymmetry," Annals of Economics and Statistics, GENES, issue 127, pages 33-60.
    3. Marc Bourreau & Carlo Cambini & Steffen Hoernig, 2015. "Price distortion under fixed-mobile substitution," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 441-454, December.

    More about this item

    Keywords

    Telecommunication; Mobile phones; Mobile-to-mobile access charges; Network effects;

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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