Price distortion under fixed-mobile substitution
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- Bourreau, M., Cambini, C. & Hoernig, S. Econ Polit Ind (2015) 42: 441. doi:10.1007/s40812-015-0017-2
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This paper analyses the impact of substitution between fixed and mobile telephony on call prices. We develop a model where consumers differ in the benefits of mobility and firms price discriminate between on-net and off-net calls. We find that call prices are distorted downwards due to substitution possibilities and customer heterogeneity, and that this distortion increases with the fixed-mobile termination mark-up.