Demand-side spillovers and semi-collusion in the mobile communications market
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- Discussion papers (SAM) 
We analyze roaming policy in the market for mobile telecommunications. Firms undertake investments in network infrastructure to increase geographical coverage, capacity in a given area, or functionality. Prior to investments, roaming policy is determined. We show that under collusion at the investment stage, firms' and a benevolent welfare maximizing regulator's interests coincide, and no regulatory intervention is needed. When investments are undertaken non-cooperatively, firms' and the regulator's interests do not coincide. Contrary to what seems to be the regulator’s concern, firms would decide on a higher roaming quality than the regulator. The effects of allowing a virtual operator to enter are also examined. Furthermore, we discuss some implications for competition policy with regard to network infrastructure investment.
UtgiverNorwegian School of Economics and Business Administration. Department of Economics