Journal of Regulatory Economics

, Volume 45, Issue 1, pp 57–74

Fixed-mobile integration

Original Article

DOI: 10.1007/s11149-013-9230-y

Cite this article as:
Hoernig, S., Bourreau, M. & Cambini, C. J Regul Econ (2014) 45: 57. doi:10.1007/s11149-013-9230-y

Abstract

Fixed-line incumbents often 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. This result is robust to changes in the competitiveness of the fixed market and to the presence of fixed-mobile substitution. 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

Network competition On/off-net pricing Integration Call externality 

JEL Classification

L51 L92 

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Steffen Hoernig
    • 1
    • 2
  • Marc Bourreau
    • 3
    • 4
  • Carlo Cambini
    • 5
    • 6
  1. 1.Nova School of Business and Economics, INOVAUniversidade Nova de LisboaLisbon Portugal
  2. 2.CEPRLondonUK
  3. 3.Department of Economics and Social SciencesTelecom ParisTechParisFrance
  4. 4.CREST-LEIParisFrance
  5. 5.DIGEPPolitecnico di TorinoTurinItaly
  6. 6.EUI - Florence School of RegulationFlorenceItaly