26 Pages Posted: 26 Feb 2013
Date Written: February 2013
Often, fixed-line incumbents also own the largest mobile network. We consider the effect of this joint ownership on market outcomes. Our model predicts that while fixed-to-mobile call prices to the integrated mobile network are more efficient than under separation, those to rival mobile networks are distorted upwards, amplifying any incumbency advantage. As concerns potential remedies, a uniform off-net pricing constraint leads to higher welfare than functional separation and even allows to maintain some of the efficiency gains.
Keywords: Call externality, Integration, Network competition, On/off-net pricing
JEL Classification: L51, L92
Suggested Citation: Suggested Citation
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