Journal of Economics

, Volume 96, Issue 3, pp 241–261 | Cite as

Mobile phone termination charges with asymmetric regulation

Article

Abstract

We model competition between two unregulated mobile phone companies with price-elastic demand and less than full market coverage. We also assume that there is a regulated full-coverage fixed network. In order to induce stronger competition, mobile companies could have an incentive to raise their reciprocal mobile-to-mobile access charges above the marginal costs of termination. Stronger competition leads to an increase of the mobiles’ market shares, with the advantage that (genuine) network effects are strengthened. Therefore, ‘collusion’ may well be in line with social welfare.

Keywords

Telecommunication Mobile phones Mobile-to-mobile access charges Network effects 

JEL Classification

L41 L96 

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.DIW BerlinBerlinGermany
  2. 2.TU BerlinBerlinGermany

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