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Fixed-Mobile Substitution and Termination Rates

Steffen Hoernig (), Marc Bourreau () and Carlo Cambini

FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia

Abstract: This paper studies the effect of termination rates on substitution between fixed and mobile calls and access, in a model where heterogeneous consumers can subscribe to one or both types of offers. Simulations show that each (fixed or mobile) termination rate has a positive effect on the take-up of the corresponding service, via the waterbed effect, and lowers subscriptions to the other service, via a cost effect. The prevailing asymmetric regulation, with very low fixed and higher mobile termination rates, corresponds to the social optimum. However, the interests of the mobile operators and of the different customer groups do not coincide. JEL codes: L51, L92

Keywords: Network competition; Fixed-mobile substitution; termination rates (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014
New Economics Papers: this item is included in nep-com and nep-reg
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Citations: View citations in EconPapers (2) Track citations by RSS feed

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Journal Article: Fixed-mobile substitution and termination rates (2015) Downloads
Working Paper: Fixed-mobile substitution and termination rates (2015)
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