Competition vs. Regulation in Mobile Telecommunications

46 Pages Posted: 18 Jun 2008 Last revised: 25 Dec 2013

See all articles by Johan Stennek

Johan Stennek

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Thomas Tangerås

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 2 versions of this paper

Date Written: October 20, 2008

Abstract

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

Stennek, Johan and Tangerås, Thomas, Competition vs. Regulation in Mobile Telecommunications (October 20, 2008). NET Institute Working Paper No. 08-09 . Available at SSRN: https://ssrn.com/abstract=1147677 or http://dx.doi.org/10.2139/ssrn.1147677

Johan Stennek

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 5501
S-114 85 Stockholm
Sweden
+46 8 665 4536 (Phone)
+46 8 665 4599 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thomas Tangerås (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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