DP9361 Fixed-Mobile Integration
|Author(s):||Marc Bourreau, Carlo Cambini, Steffen Hoernig|
|Publication Date:||February 2013|
|Keyword(s):||Call externality, Integration, Network competition, On/off-net pricing|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=9361|
Often, fixed-line incumbents also own the largest mobile network. We consider the effect of this joint ownership on market outcomes. Our model predicts that while fixed-to-mobile call prices to the integrated mobile network are more efficient than under separation, those to rival mobile networks are distorted upwards, amplifying any incumbency advantage. As concerns potential remedies, a uniform off-net pricing constraint leads to higher welfare than functional separation and even allows to maintain some of the efficiency gains.