The name is absent

Table 1: Mobile Regulation in the EU 15, Norway and Switzerland⁹

the incoming traffic remains unaffected as long as the individually optimal termination
rate is higher than the upper bound. The adoption of price-cap regulation to the model
results in a stronger investment effect on the wholesale price-cost mark up than in the
absence of regulation as termination rates are fixed. Thus, the investment effect on
profits from incoming calls is similar to standard cost-based regulation. The wholesale
mark up changes only due to the cost-reduction but not because of an increase in in-
coming calls. As termination rates are fixed for every provider separately investment
externalities under a price-cap regulation scheme only consist of an increase in traffic.
All other variables (competitors’ retail prices, termination rates and outgoing traffic) are
unaffected by investments. Indirect investment effects vanish as termination rates are
independent of competitors’ traffic.

Under a two-part tariff pricing scheme with per-unit prices at cost-level we still observe
positive investment effects on the traffic from and to the investor. One exception is
incoming calls under an incentive regulation scheme because the investor’s termination
rates are unaffected by the investment. The cost-reduction increases investor’s traffic-
dependent profits only for incoming traffic under price-cap regulation as the termination
rate level is allowed to be above costs. Similarly, there is a positive externality on com-
petitors’ traffic-dependent profit only for incoming traffic under the price-cap scheme.

⁹Information taken from the Plaut Economics Regulatory Index (Zenhauser et al. (2007)) and alter-
native regulators’ websites.

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