Is Mobile Telephony a Natural Oligopoly?

Is Mobile Telephony a Natural Oligopoly? This paper presents a model of competitive interaction among mobile telecommunications operators. Operators can offer services in twoseparate markets, urban and rural areas, and customers commute between them. Market coverage of an operator can then be interpreted as a parameter of vertical productdifferentiation. The main implication is that the industry has strong features of a``natural oligopoly'': Only a limited number of operators with possibly different coverage cansurvive in equilibrium. It is also shown that competing operators do not have an incentiveto reach roaming agreements over non-overlapping areas. On the contrary, roamingcan be easily agreed upon by colluding operators. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Is Mobile Telephony a Natural Oligopoly?

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2003 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1022191701357
Publisher site
See Article on Publisher Site

Abstract

This paper presents a model of competitive interaction among mobile telecommunications operators. Operators can offer services in twoseparate markets, urban and rural areas, and customers commute between them. Market coverage of an operator can then be interpreted as a parameter of vertical productdifferentiation. The main implication is that the industry has strong features of a``natural oligopoly'': Only a limited number of operators with possibly different coverage cansurvive in equilibrium. It is also shown that competing operators do not have an incentiveto reach roaming agreements over non-overlapping areas. On the contrary, roamingcan be easily agreed upon by colluding operators.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 4, 2004

References

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