 Bertrand equilibrium with differentiated products considering fixed costs: Korean price regulation in the mobile telephone industryJae-Do Song Telecommunications Policy, vol. 33, issue 10-11, 676-685 Abstract: In some industries such as telecommunications and electricity, the fixed costs are so high that competition is not sustainable without considering the fixed cost in pricing. The sustainability of competition is as important as enhancing competition when an industry is in the transitional period from being a monopoly owned or managed by the government to a competitive market structure driven by the market. A price competition model with asymmetric firms and product differentiation is considered in which firms compete with a normal profit constraint. The constraint is related to the sustainability of competition and can be realized through price regulation. With this constraint, firms gain only normal profit in equilibrium despite the asymmetry, and consumer surplus is maximized. The equilibrium is meaningful in defining the industry performance intended through the regulation. Moreover, the price regulation of the Korean mobile telephone market is considered to discuss any implications of this equilibrium. Keywords: Bertrand; competition; Fixed; cost; Differentiation; Asymmetry; Price; regulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:telpol:v:33:y::i:10-11:p:676-685 Ordering information: This journal article can be ordered from Access Statistics for this article Telecommunications Policy is currently edited by Erik Bohlin More articles in Telecommunications Policy from Elsevier |
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