Fixed-Mobile Integration

Bourreau, Marc; Cambini, Carlo; Hoernig, Steffen

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Fixed-Mobile Integration

CEPR Discussion Paper No. DP9361

26 Pages Posted: 26 Feb 2013

See all articles by Marc Bourreau

Carlo Cambini

Politecnico di Torino & EUI - Florence School of Regulation; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Steffen Hoernig

Nova School of Business and Economics

There are 2 versions of this paper

Date Written: February 2013

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 Classification: L51, L92

Suggested Citation: Suggested Citation

Bourreau, Marc and Cambini, Carlo and Hoernig, Steffen, Fixed-Mobile Integration (February 2013). CEPR Discussion Paper No. DP9361, Available at SSRN: https://ssrn.com/abstract=2224286