Competition and Termination in Cellular Networks

33 Pages Posted: 17 Jan 2000

See all articles by Julian Wright

Julian Wright

National University of Singapore (NUS) - Department of Economics

Date Written: December 22, 1999

Abstract

A model of competition between two interconnected cellular networks is presented which shows the effects of cellular termination charges on competition and market penetration in the cellular sector. We show that the determination of cellular termination charges is quite different to standard access pricing problems. Higher termination charges lead to more aggresive cellular pricing to attract customers (and thus termination revenue). In a calibrated model, the socially optimal termination charges are nearly three times cost when there is a monopoly fixed-to-cellular provider and almost five times cost when the fixed-to-cellular prices are determined under perfect competition.

JEL Classification: D43, K21, L41, L43, L51, L96

Suggested Citation

Wright, Julian, Competition and Termination in Cellular Networks (December 22, 1999). Available at SSRN: https://ssrn.com/abstract=201988 or http://dx.doi.org/10.2139/ssrn.201988

Julian Wright (Contact Author)

National University of Singapore (NUS) - Department of Economics ( email )

AS2 Level 6, 1 Arts Link
Singapore 117570
Singapore
6568743941 (Phone)
6567752646 (Fax)

HOME PAGE: http://profile.nus.edu.sg/fass/ecsjkdw/

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