Demand-side spillovers and semi-collusion in the mobile communications market
Working paper
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Date
2001-12Metadata
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- Discussion papers (SAM) [663]
Abstract
We analyze roaming policy in the market for mobile telecommunications. Firms
undertake investments in network infrastructure to increase geographical coverage, capacity
in a given area, or functionality. Prior to investments, roaming policy is determined. We show
that under collusion at the investment stage, firms' and a benevolent welfare maximizing
regulator's interests coincide, and no regulatory intervention is needed. When investments are
undertaken non-cooperatively, firms' and the regulator's interests do not coincide. Contrary to
what seems to be the regulator’s concern, firms would decide on a higher roaming quality
than the regulator. The effects of allowing a virtual operator to enter are also examined.
Furthermore, we discuss some implications for competition policy with regard to network infrastructure investment.
Publisher
Norwegian School of Economics and Business Administration. Department of EconomicsSeries
Discussion paper2001:32