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The effects of switching costs over the pricing strategies of operators in mobile telecommunications market

Koç, Mustafa (2008) The effects of switching costs over the pricing strategies of operators in mobile telecommunications market. [Thesis]

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Abstract

This thesis analyzes how the pricing decisions of mobile telecommunication operators are affected in a market where consumers' switching costs exist in favor of the incumbent firm which entered the market earlier. The market consists of two periods such that an incumbent firm owns all consumers in the first period and faces a new entry in the second period. As long as new consumers enter the market in the beginning of the second period, there will be both attached customers who suffer switching costs if they cancel their contract and subscribe to the new entrant and also unattached customers with no switching costs. In addition, the consumers attach value to receiving calls as well as making calls which will be introduced into their utilities by the concept of call externality. In this context, the incumbent firm will exploit switching costs by increasing off-net prices higher than the new entrant's so that it decreases the attractiveness of the new entrant's network due to the fact that it lowers the amount of calls that a subscriber of the new entrant receives. Therefore, the incumbent firm will be able to manipulate the market dynamics through its tariffs by seizing the opportunity of switching costs. Moreover, this thesis shows that the incumbent's market share increases with the access charges so that the incumbent will prefer higher access charges. In terms of welfare analysis, it would be inferred that switching costs will decrease consumer surplus in both price-discrimination and non-discriminatory prices cases. Therefore, the best practice would be imposition of remedies which eliminate or reduce switching costs in the market.

Item Type:Thesis
Uncontrolled Keywords:Mobile telecommunications market. -- Switching costs. -- Price discrimination. -- Asymmetric networks. -- Call externality. -- Late entry. -- Mobile phone. -- Telecommunication. -- Telecommunication industry. -- Telecommunication policy. -- Telecommunication sector. -- Regulation. -- Competition. -- Competition policies. -- Price policies. -- Avea. -- Aria. -- Aycell. -- Turkcell. -- Vodafone. -- Telsim. -- Mobil telekomünikasyon pazarı. -- Geçiş maliyetleri. -- Fiyat farklılaştırması. -- Asimetrik işletmeciler. -- Çağrı dışsallığı. -- Pazara sonradan giriş. -- Mobil telefon. -- Telekomünikasyon. -- Telekomünikasyon endüstrisi. -- Telekomünikasyon politikaları. -- Telekomünikasyon sektörü. -- Regülasyon. -- Rekabet. -- Rekabet politikaları. -- Fiyat politikası.
Subjects:H Social Sciences > HB Economic Theory
ID Code:14184
Deposited By:IC-Cataloging
Deposited On:27 Jul 2010 15:04
Last Modified:27 Jul 2010 15:04

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