On-net price plan as an instrument to create network externalities: Swedish Mobile Industry

Other conference contribution, 2009

This paper studies network effect induced by the on-net price plan and handset subsidy in the evolving Swedish mobile market from 2002 to 2007. An econometric model predicts the probability that the mobile subscribers will stay with their current mobile operators. The results show that the large operators will gain benefit from their network size if they offer lower on-net price plan and handset subsidy. Thus, the regulator should pay more attention to price discrimination between on- and off-net calls and set subsidy since it will affect the competition in the market.