Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/44999
Authors: 
Haucap, Justus
Heimeshoff, Ulrich
Year of Publication: 
2011
Series/Report no.: 
DICE discussion paper 16
Abstract: 
This paper explores how consumers react towards price differentiation between on-net and off-net calls in mobile telecommunications - a pricing policy that is common in many mobile telecommunications markets. Based on a survey of 1044 students we demonstrate that some consumers may suffer from a 'price differentiation bias', i.e., a fair number of consumers may overestimate the savings that result from reduced on-net and/or off-net charges, as they do not appear to weigh the prices with the probabilities of placing off-net and on-net calls. This may help to explain why it have been the smaller operators in various countries who have introduced on-net/off-net price differentiation. We also discuss the implications that such a consumer bias may have for market competition.
JEL: 
L40
L96
ISBN: 
978-3-86304-015-4
Document Type: 
Working Paper

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