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Bjørn
Hansen
Associate Professor
II
Department
of Economics
e-mail: bjorn.hansen@telenor.com
Bjørn Hansen is Cand.Oecon. from the
Recent Work
Network
competition: Empirical evidence on mobile termination rates and profitability
– April 2009
version, Joint work with Kjetil Andersson.
We analyze a model of multi firm competition between mobile network operators.
The model assumes inelastic usage demand and full penetration, and allows for
asymmetric termination rates, differences in marginal costs and vertical
differentiation. A key property is that operators’ equilibrium profit is
unaffected by an identical change in all termination rates in the market - we
call this the profit neutrality hypothesis. The model is well suited for
econometric implementation. We use a panel data set comprising north western
European mobile operators to estimate equilibrium profit functions and find
that we cannot reject the profit neutrality hypothesis. The results suggest
that a reduction in mobile termination rate levels in mature markets will not
necessarily benefit consumers.
Facility
based competition in telecommunications - Three essays on two-way access and one essay on
three-way access
BI Series
of Dissertation, 05 / 2006
Abstract
In order to
reap all benefits from telecommunications, competing firms typically have to
cooperate in order to exploit economies of scale and scope. Thus, firms being
active in the same market are supposed to compete in some dimensions and
cooperate in other dimensions. There is potentially a trade-off between
cooperation and competition. In this dissertation four cases of interplay
between competition and cooperation are investigated and we find that in some
cases there is indeed a treade-off. In some cases (but not all cases) firms can
arrange their cooperation such that they are able to soften competition and
increase prices. Whether such effects are present or not depends on technology
and market characteristics. It is accordingly necessary to carry out case by
case analysis in order to assess the interplay between cooperation and
competition. A common feature of the four papers in the dissertation is that
they take as a starting point a concrete and policy relevant issue where
telecomunications firms have to cooperate. Game theoretic models are adapted to
each case and particular care is taken in capturing relevant market and
technology features.
Network
Competition when Costs are Heterogeneous
(updatet
april 2006)
In this paper we study network competition when
costs differ among interconnected networks. Such cost differences are observed
in the mobile sector as well as in fixed networks. In the paper we find that
cost based regulation will not result in first best market shares. The low cost
firm will be too small in equilibrium. This is partly due to tariff mediated
network externalities. This result is in contrast to the standard result in the
literature on network competition where one assumes symmetric cost structure.
In the present paper, the regulator can induce a first best market equilibrium
by combining cost based regulation of termination rates with a tax based on the
number of subscribers. If such a tax is not an available instrument, the
regulator can improve welfare by granting a termination margin to the low cost
firm as compared to cost based regulation.
Termination Rates and Fixed Mobile Substitution
(updatet
april 2006)
In this paper we consider fixed mobile substitution
in a model of mobile network competition. We demonstrate that the profit
neutrality result from the standard model of network competition (Laffont Rey
Tirole1998a) holds if the number of mobile subscribers is given. Thus the
mobile termination rate does not have an impact on profits in the mobile sector
in a mature market where all consumers are hooked up to a mobile network and
fixed mobile substitution results in subscribers disconnecting from the fixed
network. However, if fixed mobile substitution results in an increased number
of subscribers in mobile networks, then the mobile termination rate will have
an impact on profits in the mobile sector. The implication of the analysis is
that there is a case for regulating mobile termination rates in the growth
phase, whereas there is less need for regulation in mature markets
characterized by a stable size of the mobile sector. This seems to be the
opposite of the approach taken by regulators in Europe, where mobile firms were
free to set termination rates in the growth phase and regulation of termination
rates is introduced once markets mature.
Last updated: 20 April. 06