Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)
Empirical evidence on the relationship between mobile termination rates and firms’ profit
(), Øystein Foros
() and Bjørn Hansen
Abstract: The comprehensive theoretical literature on mobile
termination rates (MTRs) is inconclusive on how the level of MTRs affects
overall consumer charges and firms’ profit. In a theoretical model, well
suited for econometric implementation, we show that where consumers buy a
bundle with included usage, as we now observe in the market, the level of
MTRs has no impact on retail prices and firms’ profit. We use a panel data
set from saturated European markets and find that an identical change in
MTRs does not have a significant impact on firms’ profit.
Keywords: Mobile termination rates; consumer charges; firms’ profit; (follow links to similar papers)
JEL-Codes: C23; L21; L51; L96; (follow links to similar papers)
28 pages, August 28, 2012
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