Ex-Ante Asymmetric Regulation and Retail Mmarket Competition: Evidence from Europe’s Mobile Industry
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Abstract
The aim of this paper is to assess the impacts of ex-ante asymmetric mobile termination rate regulation on ex-post market competition in the Europe’s mobile industry. Two regulatory instruments associated with the asymmetry between operators are implemented, namely glide path regulation and asymmetric regulation. The first regulatory device is to gradually decrease asymmetric treatment between mobile and fixed network operators while the second one is associated with asymmetric flexibility in setting MTRs between European mobile operators. With different model specifications, our study demonstrates that when the MTRs are regulated to lower levels, later entrants are likely to cut retail prices to gain more subscribers, and resulting in lower average national service prices. Furthermore, we find that asymmetric regulation plays a positive role on entrant penetration as well as the competitiveness of Europe’s mobile markets.
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