The effect of asymmetry among networks on the provision charges of mobile telephone services.
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The article analyses mobile telecommunications and the asymmetric market for two-way access characteristic of it, with the aid of market-structure models. It examines whether the cost-based provision charges prescribed in the regulations offer a desirable solution in welfare terms, and if so, under what conditions. Augmenting the models in literature of the late 1990s that assumed a symmetrical market with consumer loyalty and the differing cost structures of providers, the author concludes that neither equilibrium profit of providers nor welfare is independent of the provision charges, regardless of what price structures are used. From the provider's point of view, the provision charges can offer scope for collusion. From the consumer-surplus point of view, charges higher than the provision costs are more favourable in situations closer to market entry, while in a mature market, cost-based or lower charges are more favourable.
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