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Department of Business and Management Science, Norwegian School of Economics (NHH) Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)

No 2012/10:
Empirical evidence on the relationship between mobile termination rates and firms’ profit

Kjetil Andersson (), 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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