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Empirical evidence on the relationship between mobile termination rates and firms’ profit

Author

Listed:
  • Andersson, Kjetil

    (Dept. of Economics and Business Administration, University of Agder)

  • Foros, Øystein

    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

  • Hansen, Bjørn

    (Telenor Research and Innovation (R&I))

Abstract

The comprehensive theoretical literature on mobile termination rates (MTRs) is inconclusive on how the level of MTRs affects overall consumer charges and firms’ profit. In a theoretical model, well suited for econometric implementation, we show that where consumers buy a bundle with included usage, as we now observe in the market, the level of MTRs has no impact on retail prices and firms’ profit. We use a panel data set from saturated European markets and find that an identical change in MTRs does not have a significant impact on firms’ profit.

Suggested Citation

  • Andersson, Kjetil & Foros, Øystein & Hansen, Bjørn, 2012. "Empirical evidence on the relationship between mobile termination rates and firms’ profit," Discussion Papers 2012/10, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2012_010
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    File URL: http://hdl.handle.net/11250/164204
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    References listed on IDEAS

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    Cited by:

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    2. Hurkens, Sjaak & López, Ángel L., 2021. "Mobile termination rates and retail regimes in Europe and the US: A unified theory of CPP and RPP," Information Economics and Policy, Elsevier, vol. 56(C).
    3. Mansi Kedia, 2019. "Testing the waterbed effect for India’s telecom industry," Indian Economic Review, Springer, vol. 54(1), pages 121-148, June.

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    More about this item

    Keywords

    Mobile termination rates; consumer charges; firms’ profit;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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