Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Saturday, July 19, 2008

Competition vs. Regulation in Mobile Telecommunications

Posted by D. Daniel Sokol

Thomas TangerĂ¥s, Research Institute of Industrial Economics and Johan Stennek, Research Institute of Industrial Economics have an interesting paper on Competition vs. Regulation in Mobile Telecommunications.

ABSTRACT: This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome may prevail independently of market concentration when access prices are determined in bilateral negotiations.

A light-handed regulatory policy can induce effective competition. Call prices are close to the marginal cost if the networks are sufficiently close substitutes. Neither demand nor cost information is required.

A unique and symmetric call price equilibrium exists under symmetric access prices, provided that call demand is sufficiently inelastic. Existence encompasses the case of many networks and high network.

http://lawprofessors.typepad.com/antitrustprof_blog/2008/07/competition-vs.html

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