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http://hdl.handle.net/2451/28391
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| Title: | The Effect Of Entry And Market Structure On Cellular Pricing Tactics |
| Authors: | Seim, Katja - Stanford University
Viard, V. Brian - Stanford University |
| Keywords: | entry, market structure, cellular, price discrimination,
nonlinearpricing, telecommunications |
| Issue Date: | 2004 |
| Series/Report no.: | NET Institute Working Paper;03-13 |
| Abstract: | We test the effect of entry on the tariff choices of incumbent cellular
firms. We relate the change in the breadth of calling plans between
1996, when incumbents enjoyed a duopoly market, and 1998, when
incumbents faced increased competition from personal communications
services (PCS) firms. Entry by PCS competitors differed across
geographic markets due to the number of licenses left undeveloped as a
result of the bankruptcy of some of the auctions’ winning bidders
and due to variation across markets in the time required to build a
sufficiently large network of wireless infrastructure. We find that
incumbents increase tariff variety in markets with more entrants and
that this effect is not explained by demographic heterogeneity or cost
differences in maintaining calling plans across markets. We also find
that incumbents are more likely to upgrade their technology from the old
analog technology to the new digital technology in markets with more
entry, suggesting that entry also has indirect effects on tariff choice
via firms' technology adoption decisions. |
| URI: | http://hdl.handle.net/2451/28391 |
| Appears in Collections: | NET Institute Working Papers Series
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