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Simulating Discount-Pricing Strategies for the GSM-Mobile Market

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  • Sven Schade
  • Thorsten Frey
  • Nezar Mahmoud

Abstract

The article analyzes network effects on the German GSM mobile telephony market. The authors use an ACE-approach to examine how a new competitor can successfully gain ground in the market with a discount-pricing strategy. In particular they study the impact of several elements of a mobile phone contract like on-net-, landline- or off-net-fees on the competitor’s market share. It turns out that it is possible to successfully enter the market with a prepaid contract using a discount-pricing strategy where the single fees only marginally exceed the termination rates, which have to be transferred to foreign network operators. Copyright Gabler Verlag 2009

Suggested Citation

  • Sven Schade & Thorsten Frey & Nezar Mahmoud, 2009. "Simulating Discount-Pricing Strategies for the GSM-Mobile Market," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 1(4), pages 289-300, August.
    • Handle: RePEc:spr:binfse:v:1:y:2009:i:4:p:289-300
    DOI: 10.1007/s12599-009-0057-0
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    References listed on IDEAS

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    1. Heli Koski & Tobias Kretschmer, 2004. "Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(1), pages 89-113, November.
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    5. Michal Grajek, 2003. "Estimating Network Effects and Compatibility in Mobile Telecommunications," CIG Working Papers SP II 2003-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
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    Cited by:

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    2. Marcel Fritz & Christian Schlereth & Stefan Figge, 2011. "Empirical Evaluation of Fair Use Flat Rate Strategies for Mobile Internet," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 3(5), pages 269-277, October.
    3. Muck, Johannes, 2016. "Tariff-mediated network effects with incompletely informed consumers," DICE Discussion Papers 210, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    4. Torsten Gerpott & Sabrina Berg, 2011. "Determinants of the Willingness to Use Mobile Location-Based Services," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 3(5), pages 279-287, October.

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