Abstract
We analyze roaming policy in the market for mobile telecommunications. Firms undertake quality improving investments in network infrastructure in order to increase geographical coverage, capacity in a given area, or functionality. Prior to investments, roaming policy is determined. We show that under collusion at the investment stage, firms’ and a benevolent welfare maximizing regulator’s interests coincide, and no regulatory intervention is needed. When investments are undertaken non-cooperatively, firms’ and the regulator’s interests do not coincide. Contrary to what seems to be the regulator’s concern, firms would decide on a higher roaming quality than the regulator. The effects of allowing a virtual operator to enter are also examined. Furthermore, we discuss some implications for competition policy with regard to network infrastructure investment.
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Foros, Ø., Hansen, B. & Sand, J.Y. Demand-side Spillovers and Semi-collusion in the Mobile Communications Market. Journal of Industry, Competition and Trade 2, 259–278 (2002). https://doi.org/10.1023/A:1021588625828
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DOI: https://doi.org/10.1023/A:1021588625828