Competition vs. Regulation in Mobile Telecommunications
52 Pages Posted: 29 Jun 2007
There are 2 versions of this paper
Competition vs. Regulation in Mobile Telecommunications
Date Written: February 2007
Abstract
This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome prevails independently of market concentration when access prices are determined in bilateral negotiations. A light-handed regulatory policy can induce effective competition. Call prices are close to the marginal cost if the networks are sufficiently close substitutes. Neither demand nor cost information is required. A unique and symmetric call price equilibrium exists under symmetric access prices, provided that call demand is sufficiently inelastic. Existence encompasses the case of many networks and high network substitutability.
Keywords: Access price competition, entry, network competition, network substitutability, regulation, two-way access
JEL Classification: L51, L96
Suggested Citation: Suggested Citation
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