Testing the "waterbed" effect in mobile telephony

  title={Testing the "waterbed" effect in mobile telephony},
  author={Christos Genakos and Tommaso M. Valletti},
This paper examines the impact of regulatory intervention to cut termination rates of calls from fixed lines to mobile phones. Under quite general conditions of competition, theory suggests that lower termination charges will result in higher prices for mobile subscribers, a phenomenon known as the waterbed effect. The waterbed effect has long been hypothesized as a feature of many two-sided markets and especially the mobile telephony industry. Using a uniquely constructed panel of mobile… CONTINUE READING

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