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Mobile Termination and Consumer Expectations under the Receiver-Pays Regime

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Abstract

We analyze how termination charges affect retail prices when taking into account that receivers derive some utility from a call and when firms may charge consumers for receiving calls. A novel feature of our paper is that we consider passive self-fulfilling expectations and do not allow for negative reception charges. We reconfirm the finding of profit neutrality when firms cannot use termination-based price discrimination and show that connectivity is prone to breakdown.

Suggested Citation

  • Sjaak Hurkens & Ángel Luis López, 2010. "Mobile Termination and Consumer Expectations under the Receiver-Pays Regime," Working Papers 10-12, NET Institute.
    • Handle: RePEc:net:wpaper:1012
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    References listed on IDEAS

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    Cited by:

    1. Thomas P. Tangerås, 2014. "Network competition with income effects," RAND Journal of Economics, RAND Corporation, vol. 45(3), pages 645-673, September.

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    More about this item

    Keywords

    bill and keep; call externality; access pricing; interconnection; receiver pays; consumer expectations.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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