Competition in the German cellular market? Lessons of duopoly

Matthias Stoetzer and Daniel Tewes

Telecommunications Policy, 1996, vol. 20, issue 4, 303-310

Abstract: By examining the empirical evidence of cellular market evolution in Germany, this paper evaluates the degree of intensity of competition at the level of network operation as well as service provision. Furthermore, the paper incorporates an analysis of the developments on the demand side. It is shown that operators have mainly concentrated their competitive efforts on qualitative service aspects, whereas price competition has been neglected. Following the entry of the third network operator, the hitherto collusive pricing behaviour has changed somewhat, but the operators yet avoid general price reductions in favour of price discrimination. On the level of service provision, the market turns out to be very competitive. Mergers and market exits on one side occur along with new entries on the other side.

Date: 1996
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