Mobile Telephony in Emerging Markets: The Importance of Dual-SIM Phones

Andersson Kjetil () and Göller Daniel ()
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Andersson Kjetil: University of Agder, School of Business and Law, Department of Economics and Finance, Universitetsveien 19, N-4630Kristiansand, Norway
Göller Daniel: University of Agder, School of Business and Law, Department of Economics and Finance, Universitetsveien 19, N-4630Kristiansand, Norway

Review of Network Economics, 2020, vol. 19, issue 3, 189-219

Abstract: A substantial share of customers in emerging markets use dual-SIM phones and subscribe to two mobile networks. A primary motive for so called multi-simming is to take advantage of cheap on-net services from both networks. In our modelling effort, we augment the seminal model of competing telephone networks á la Laffont, Rey and Tirole (1998b) by a segment of flexible price hunters that may choose to multi-sim. According to our findings, in equilibrium, the networks set a high off-net price in the linear tariffs to achieve segmentation. This induces the price hunters to multi-sim. We show that increased deployment of dual-SIM phones may induce a mixing equilibrium with high expected on-net prices. Thus, somewhat paradoxically, deployment of a technology that increases substitutability, and thereby competition, may end up raising prices.

Keywords: network competition; multi-sim; dual-SIM phones; price discrimination (search for similar items in EconPapers)
JEL-codes: D43 L13 L96 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1515/rne-2020-0040

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