Working Paper: CEPR ID: DP9361
Authors: Marc Bourreau; Carlo Cambini; Steffen Hoernig
Abstract: Often, fixed-line incumbents 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. 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.
Keywords: call externality; integration; network competition; on-off-net pricing
JEL Codes: L51; L92
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fixed-mobile integration (L96) | FTM calls to rival mobile networks pricing (L96) |
| fixed-mobile integration (L96) | FTM calls to integrated mobile network pricing (L96) |
| fixed-mobile integration (L96) | strategic choice for zero FTM termination rates (L96) |
| fixed-mobile integration (L96) | market shares and profits (D33) |