Entry in telecommunication : customer loyalty, price sensitivity and access prices
Working paper
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http://hdl.handle.net/11250/162902Utgivelsesdato
2002-07Metadata
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Sammendrag
The purpose of this article is to investigate the prospects for entry into an existing
network in the telecommunication industry, and how public policy may promote a
more competitive outcome. We apply a model that captures the fact that the
incumbent has an installed base of loyal consumers, some consumers are price
sensitive, and the entrant is charged an access fee for entering the network. We
distinguish between classical (de novo) entry and reciprocal entry (incumbent entering
the neighbouring market), and analyse how such public policy measures as (i)
publication of prices by the authorities and (ii) lower access fees affect the
competitive outcome. In the reciprocal entry model we find that lower access fees
tend to discourage entry into a neighbouring market, while the publishing of prices has an ambiguous effect on entry.
Utgiver
Norwegian School of Economics and Business Administration. Department of EconomicsSerie
Discussion paper2002:15