The name is absent

Table 3: Expected Outcomes

retical model one should expect a negative effect of capex on the investor’s termination
rate. A positive effect on the competitors’ termination rates is expected in the absence
of regulation whereas the effect is nil or negative dependent on the underlying regulation
scheme. Concerning the effect on off-net traffic one should expect a positive effect on the
competitors’ incoming traffic. Note that with cost-reducing investments no (additional)
investment effect on the investor’s incoming calls should be expected as the whole effect
on incoming traffic stems from the change in the termination rate due to investments.
Dewenter and Haucap (2005) have shown that larger providers choose lower termination
rates than smaller competitors. As this aspect was not explicitly modelled no proposi-
tion could be derived from the theoretical model without further assumptions.

With a higher population concentration less infrastructure must be installed. Thus,
maintenance costs and also costs for keeping the network running are expected to be
lower which should be reflected in a lower termination rate.

Regulation effects are expected to be positive with regard to termination rates because
of the competition-inducing intention of regulation. Regulation is necessary where prices
are not at a competitive level. Thus, in countries where regulation is existent higher
prices should be in place which have to be brought down to a competitive level. The
coefficients of regulation dummies should therefore not be interpreted as the effect of
regulation on termination rates but as coefficients of control variables due to the pooled
estimation setup.

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