Discussion paper

DP6073 Competition vs. Regulation in Mobile Telecommunications

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.


Stennek, J and T Tangerås (2007), ‘DP6073 Competition vs. Regulation in Mobile Telecommunications‘, CEPR Discussion Paper No. 6073. CEPR Press, Paris & London. https://cepr.org/publications/dp6073