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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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    More about this item

    Keywords

    Mobile termination rates; consumer charges; firms’ profit;

    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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