The Determinants of Prices in Mobile Voice Market: The Impact of Regulatory Policy and Market Structure

This study examines the main determinants of mobile service prices and discusses the impact of market structure and regulations on retail prices in a mobile services market. A simultaneous equations model and a reduced form model are estimated using a panel dataset for 26 countries from 2002 to 2014. The estimation results suggest that the market concentration measured by the number of mobile network operators (MNOs) has a positive and statistically significant effect on prices, while the regulatory policy to facilitate new entrants (mobile virtual network operators, MVNOs) is not found to be significant, implying that ex-post regulation in a mature mobile market might not be as effective as expected in lowering prices. The implementation of mobile number portability (MNP) has significant effects on price reduction only with low switching barriers. Additionally, we find the consistent evidence that there exists substitution relationship between mobile voice and mobile data services.