Working Paper Series
Competition vs. Regulation in Mobile Telecommunications
() and Thomas Tangerås
Abstract: 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: Network Competition; Two-way Access; Access Price Competition; Entry; Regulation; Network Substitutability; (follow links to similar papers)
JEL-Codes: L51; L96; (follow links to similar papers)
50 pages, December 20, 2006
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