Year: 2009
Type: preprint
Abstract: We propose an explanation of the reluctance of mobile operators to move toward low levels of mobile to mobile (MTM) termination rates, that is based on the heterogeneity of calling patterns and demand elasticities among users of the service.We show that when the elasticity of participation and the intensity of usage are negatively correlated, the following conclusions hold: i) The profit maximizing MTM reciprocal termination rate is above the marginal termination cost; ii) The welfare maximizing termination rate is also above cost, but below the former.We extend the analysis to on-net / off-net pricing, and also discuss the impact of fixed to mobile termination.
Language: English
Topic: ICT Impact and Policies
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2168832389