Calling Party Pays or Receiving Party Pays? The Diffusion of Mobile Telephony with Endogenous Regulation

28 Pages Posted: 15 Dec 2005

See all articles by Ralf Dewenter

Ralf Dewenter

University of the Federal Armed Forces Hamburg - Department of Economics

Jörn Kruse

University of the Federal Armed Forces Hamburg - Department of Economics

Date Written: November 18, 2005

Abstract

This paper analyzes the impact of different payment regimes for mobile-to-mobile off-net calls on the diffusion of mobile telephony, using data on 84 countries from all over the world. Since the decision whether or not countries are likely to switch from RPP to CPP is not independent from penetration rates, a problem of endogenous regulation arises. In order to account for this problem we refer to data on political and democratic stability to instrument endogenous policy decisions. However, positive effects from regime switching seem to vanish when accounting for endogenous regulation. The effects of introducing competition instead seems to be underestimated ignoring endogeneity.

Keywords: Mobile telephony markets, calling-party-pays, mobile termination fees, endogenous regulation

JEL Classification: L51, L96, K23

Suggested Citation

Dewenter, Ralf and Kruse, Jörn, Calling Party Pays or Receiving Party Pays? The Diffusion of Mobile Telephony with Endogenous Regulation (November 18, 2005). Available at SSRN: https://ssrn.com/abstract=869709 or http://dx.doi.org/10.2139/ssrn.869709

Ralf Dewenter (Contact Author)

University of the Federal Armed Forces Hamburg - Department of Economics ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

Jörn Kruse

University of the Federal Armed Forces Hamburg - Department of Economics ( email )

Von-Melle-Park 5
20146 Hamburg
Germany

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