Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: Market Structure and Firm Strategy in Oligopoly D03-V1
Rapidly increasing sales of multi-SIM phones, mobile penetration rates above 100% and reported customer behavior all point to the fact that a significant share of mobile customers in emerging markets tend to use more than one SIM card. A primary motive for this is to avoid making expensive off-net calls. We add a segment of flexible prepaid customers, who choose to "multi-sim" in equilibrium to the seminal model of competing telephone networks a la Laffont, Rey and Tirole (1998b). In equilibrium, the networks choose to set a very high prepaid off-net price to achieve segmentation. This incentive prevails, even if termination rates are set to marginal costs.