Friday, December 23, 2011
The Welfare Effects of Mobile Termination Rate Regulation in Asymmetric Oligopolies: the Case of Spain
Posted by D. Daniel Sokol
Sjaak Hurkens (Institute for Economic Analysis (CSIC)) and Angel Luis Lopez (Public-Private Sector Research Center, IESE Business School, University of Navarra) address The Welfare Effects of Mobile Termination Rate Regulation in Asymmetric Oligopolies: the Case of Spain.
ABSTRACT: We examine the effects of mobile termination rate regulation in asymmetric oligopolies. We do this by extending existing models of asymmetric duopoly and symmetric oligopoly where consumer expectations about market shares are passive. We ?first calibrate product differentiation parameters using detailed data from the Spanish market from 2010. Next, we predict equilibrium outcomes and welfare effects under alternative scenarios of future termination rates. Lowering termination rates typically lowers profits of all networks and improves consumer and total surplus.