Competition vs. Regulation in Mobile Telecommunications
46 Pages Posted: 18 Jun 2008 Last revised: 25 Dec 2013
Date Written: October 20, 2008
This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome may prevail independently of market concentration when access prices are determined in bilateral negotiations. A lighthanded 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: network competition, two-way access, mobile termination
JEL Classification: L12, L14, L51, L96
Suggested Citation: Suggested Citation