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Price competition and the Bertrand model: the paradox of the German mobile discount market

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  • Daniel Kaimann
  • Britta Hoyer

Abstract

We investigate the degree of price competition among telecommunication firms. Underlying a Bertrand model of price competition, we empirically model pricing behaviour in an oligopoly. We analyse panel data of individual pricing information of mobile phone contracts offered between 2011 and 2017. We provide empirical evidence that price differences as well as reputational effects serve as a signal to buyers and significantly affect market demand. Additionally, we find that brands lead to an increase in demand and thus are able to generate spillover effects even after price increase.

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  • Daniel Kaimann & Britta Hoyer, 2019. "Price competition and the Bertrand model: the paradox of the German mobile discount market," Applied Economics Letters, Taylor & Francis Journals, vol. 26(1), pages 54-57, January.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:1:p:54-57
    DOI: 10.1080/13504851.2018.1436141
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    Cited by:

    1. Vintila Alexandra & Roman Mihai Daniel, 2021. "Bertrand competition under asymmetric conditions," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 15(1), pages 235-244, December.

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