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Calling party pays or receiving party pays? The diffusion of mobile telephony with endogenous regulation

  • Dewenter, Ralf
  • Kruse, Jörn

This paper analyzes the impact on mobile telephony diffusion patterns of the two predominant payment regimes, calling party pays (CPP) and receiving party pays (RPP), for mobile termination services. By applying instrumental variable techniques to panel data we account for a possible interdependency of penetration rates and regulatory interventions. For this purpose we use data on political and institutional factors to instrument endogenous regulatory decisions. We conclude from our empirical analysis that there is no significant impact of either RPP or CPP on penetration rates. Therefore an application of RPP in order to obviate regulation of termination fees would be feasible.

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Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 10.

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Date of creation: 2010
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Handle: RePEc:zbw:dicedp:10
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  19. Donald, Stephen G & Sappington, David E M, 1997. "Choosing among Regulatory Options in the United States Telecommunications Industry," Journal of Regulatory Economics, Springer, vol. 12(3), pages 227-43, November.
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