Competition in the LM market

This paper considers the competition in the LM (land-to-mobile) market mainly by focusing on how access charges are determined in a competitive environment. Contrary to the widely held belief, the main beneficiary to introducing competition into the LM market (except consumers) is the mobile network operator if LM services are homogeneous. This is due to its ability to charge differentiated access fees to each of the LM service providers thereby inducing them to compete for LM retail prices. Also, competition in the LM market raises social welfare by eliminating double marginalization. Thus, the regulation imposing uniform access charges is socially undesirable in the sense that it hinders LM service providers from effectively competing for retail prices.