Empirical Evidence on the Relationship between Mobile Termination Rates and Firms' Profits |
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Authors: | Kjetil Andersson Øystein Foros Bjørn Hansen |
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Institution: | 1. University of Agder, Kristiansand, Norway;2. NHH Norwegian School of Economics, Bergen, Norway;3. Telenor, Fornebu, Norway |
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Abstract: | The theoretical literature on mobile termination rates (MTRs) is inconclusive on how the level of MTRs affects overall consumer charges and firms' profits. We show that when firms offer bundles with fixed included usage – a tariff structure that has become more common in recent years – an identical change in all MTRs does not affect firms' retail prices or profits. We use a panel dataset from saturated European markets to estimate the effect of MTRs on mobile operators' profits. As predicted by the theoretical model, we cannot reject the fact that firms' profits are unaffected by an identical change in all MTRs. |
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Keywords: | Competition mobile communication markets regulation C23 L21 L51 L96 |
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