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Journal Article Asymmetric Regulation of Mobile Access Charges and Consumer Welfare with Price Regulation
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Authors
Jongyong Lee, Duk Hee Lee, Choong Young Jung
Issue Date
2010-06
Citation
ETRI Journal, v.32, no.3, pp.447-456
ISSN
1225-6463
Publisher
한국전자통신연구원 (ETRI)
Language
English
Type
Journal Article
DOI
https://dx.doi.org/10.4218/etrij.10.0109.0489
Abstract
Asymmetric regulation as applied to mobile termination rates refers to regulatory arrangements in which different mobile operators charge different termination rates, even though the services provided are essentially identical. The asymmetric regulation has been frequently used as a regulatory tool to support new entrants to a mobile market. This paper examines the economic effects of asymmetric regulation of mobile termination rates using a theoretical model and its simulation. The result shows that when there is no noticeable difference in brand loyalty between mobile operators with the high degree of substitutability between services provided by mobile operators, and the costs of new entrants are low, a reduction in the asymmetry of mobile access prices results in an enhancement of consumer welfare. These findings provide positive evidence for the argument that in certain situations asymmetric pricing of mobile access services may be counterproductive for consumer welfare.
KSP Keywords
Asymmetric pricing, Asymmetric regulation, Brand loyalty, Consumer welfare, High degree, New Entrants, Price regulation, economic effects, mobile access, mobile operators, theoretical model