Citation

Discussion Paper Details

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Title: Competition vs. Regulation in Mobile Telecommunications

Author(s): Johan Stennek and Thomas P. Tangerås

Publication Date: February 2007

Keyword(s): access price competition, entry, network competition, network substitutability, regulation and two-way access

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Stennek, J and Tangerås, T. 2007. 'Competition vs. Regulation in Mobile Telecommunications'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6073