Economia e Politica Industriale

, Volume 42, Issue 4, pp 441–454 | Cite as

Price distortion under fixed-mobile substitution

Article

Abstract

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.

Keywords

Network competition Fixed-mobile substitution Price discrimination 

JEL Classification

L51 L92 

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Copyright information

© Associazione Amici di Economia e Politica Industriale 2015

Authors and Affiliations

  • Marc Bourreau
    • 1
    • 2
  • Carlo Cambini
    • 3
    • 4
  • Steffen Hoernig
    • 5
    • 6
  1. 1.Department of Economics and Social SciencesTelecom ParisTechParisFrance
  2. 2.CREST-LEIParisFrance
  3. 3.Politecnico di Torino, DIGEPTurinItaly
  4. 4.EUI, Florence School of RegulationFlorenceItaly
  5. 5.Nova School of Business and EconomicsUniversidade Nova de LisboaLisboaPortugal
  6. 6.CEPRLondonUK

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