This paper presents a tractable model of network competition with many firms, elastic subscriber demand, off-net price discrimination, call externalities, and cost and market share asymmetries. We characterize stability in expectations and equilibrium under firm- and market-level network effects. The model is applied to simulate the effects of termination rates, market maturity, and retail pricing strategies. We show that predictions based on duopoly models can be misleading, in particular concerning the effects of termination rates.
- Elastic demand
- Mobile termination rates
- Multiple networks
- On-/off-net pricing
- Telecommunications network competition