Fixed-mobile integration |
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Authors: | Steffen Hoernig Marc Bourreau Carlo Cambini |
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Institution: | 1. Nova School of Business and Economics, INOVA, Universidade Nova de Lisboa, Campus de Campolide, Lisbon?, 1099-032, Portugal 2. CEPR, London, UK 3. Department of Economics and Social Sciences, Telecom ParisTech, Paris, France 4. CREST-LEI, Paris, France 5. DIGEP, Politecnico di Torino, Turin, Italy 6. EUI - Florence School of Regulation, Florence, Italy
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Abstract: | Fixed-line incumbents often also own the largest mobile network. We consider the effect of this joint ownership on market outcomes. Our model predicts that while fixed-to-mobile call prices to the integrated mobile network are more efficient than under separation, those to rival mobile networks are distorted upwards, amplifying any incumbency advantage. This result is robust to changes in the competitiveness of the fixed market and to the presence of fixed-mobile substitution. As concerns potential remedies, a uniform off-net pricing constraint leads to higher welfare than functional separation, and even allows to maintain some of the efficiency gains. |
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