52 Pages Posted: 29 Jun 2007
Date Written: February 2007
This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome prevails independently of market concentration when access prices are determined in bilateral negotiations. A light-handed 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: Access price competition, entry, network competition, network substitutability, regulation, two-way access
JEL Classification: L51, L96
Suggested Citation: Suggested Citation
Stennek, Johan and Tangerås, Thomas, Competition vs. Regulation in Mobile Telecommunications (February 2007). CEPR Discussion Paper No. 6073. Available at SSRN: https://ssrn.com/abstract=997371
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