IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_9303.html
   My bibliography  Save this paper

Evaluating the Impact of Price Caps - Evidence from the European Roam-Like-at-Home Regulation

Author

Listed:
  • Giulia Canzian
  • Gianluca Mazzarella
  • Frank Verboven
  • Stefano Verzillo
  • Louis Ronchail

Abstract

The roam-like-at-home regulation (RLAH) eliminated all mobile roaming surcharges to Eu-ropean consumers travelling within the European Economic Area (EEA). We measure the causal impact of the regulation on EEA roaming traffic, using the Rest of the World as a control group. We find large and heterogeneous effects on retail and wholesale traffic volumes and revenues. To evaluate the welfare effects of the regulation, we develop a framework that includes consumer surplus, retail and wholesale profits. The gains in consumer surplus are large, and mainly stem from data services. The consumer gains are proportionately larger in small, open economies and in countries with previously high roaming prices. Finally, total welfare increases considerably, because the consumer surplus gains far outweigh profit losses. As such, the removal of market power more than compensates for a distortion from a possible overconsumption at zero surcharges.

Suggested Citation

  • Giulia Canzian & Gianluca Mazzarella & Frank Verboven & Stefano Verzillo & Louis Ronchail, 2021. "Evaluating the Impact of Price Caps - Evidence from the European Roam-Like-at-Home Regulation," CESifo Working Paper Series 9303, CESifo.
    • Handle: RePEc:ces:ceswps:_9303
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp9303.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Spruytte, Jonathan & Van der Wee, Marlies & de Regt, Mieke & Verbrugge, Sofie & Colle, Didier, 2017. "International roaming in the EU: Current overview, challenges, opportunities and solutions," Telecommunications Policy, Elsevier, vol. 41(9), pages 717-730.
    2. Christos Genakos & Tommaso Valletti & Frank Verboven, 2018. "Evaluating market consolidation in mobile communications," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 45-100.
    3. Keith Head & Thierry Mayer, 2021. "The United States of Europe: A Gravity Model Evaluation of the Four Freedoms," Journal of Economic Perspectives, American Economic Association, vol. 35(2), pages 23-48, Spring.
    4. Néstor Duch-Brown & Lukasz Grzybowski & André Romahn & Frank Verboven, 2023. "Evaluating the Impact of Online Market Integration—Evidence from the EU Portable PC Market," American Economic Journal: Microeconomics, American Economic Association, vol. 15(4), pages 268-305, November.
    5. Liran Einav & Amy Finkelstein & Mark R. Cullen, 2010. "Estimating Welfare in Insurance Markets Using Variation in Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 877-921.
    6. Martin B. Hackmann & Jonathan T. Kolstad & Amanda E. Kowalski, 2015. "Adverse Selection and an Individual Mandate: When Theory Meets Practice," American Economic Review, American Economic Association, vol. 105(3), pages 1030-1066, March.
    7. Martin Cave & Christos Genakos & Tommaso Valletti, 2019. "The European Framework for Regulating Telecommunications: A 25-year Appraisal," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 47-62, August.
    8. Paolo Lupi & Fabio M. Manenti, 2009. "Traffic Management In Wholesale International Roaming: Towards A More Efficient Market?," Bulletin of Economic Research, Wiley Blackwell, vol. 61(4), pages 379-407, October.
    9. Dubois, Pierre & Gandhi, Ashvin & Vasserman, Shoshana, 2022. "Bargaining and International Reference Pricing in the Pharmaceutical Industry," Research Papers 3889, Stanford University, Graduate School of Business.
    10. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
    11. Salsas, Roger & Koboldt, Christian, 2004. "Roaming free?: Roaming network selection and inter-operator tariffs," Information Economics and Policy, Elsevier, vol. 16(4), pages 497-517, December.
    12. Muñoz-Acevedo, Ángela & Grzybowski, Lukasz, 2023. "Impact of roaming regulation on revenues and prices of mobile operators in the EU," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muñoz-Acevedo, Ángela & Grzybowski, Lukasz, 2023. "Impact of roaming regulation on revenues and prices of mobile operators in the EU," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    2. Jack (Peiyao) Ma & Andrea Mantovani & Carlo Reggiani & Annette Broocks & Néstor Duch-Brown, 2024. "The Price Effects of Prohibiting Price Parity Clauses: Evidence from International Hotel Groups," Economics Series Working Papers 1043, University of Oxford, Department of Economics.
    3. Martin Quinn & Miguel Godinho de Matos & Christian Peukert, 2024. "The Welfare Effects of Mobile Internet Access: Evidence from Roam-Like-at-Home," The Economic Journal, Royal Economic Society, vol. 134(659), pages 1228-1246.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Geruso & Timothy J. Layton & Grace McCormack & Mark Shepard, 2023. "The Two-Margin Problem in Insurance Markets," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 237-257, March.
    2. Mérel, Pierre & Ortiz-Bobea, Ariel & Paroissien, Emmanuel, 2021. "How big is the “lemons” problem? Historical evidence from French wines," European Economic Review, Elsevier, vol. 138(C).
    3. de Meza, David & Webb, David C., 2017. "False diagnoses: pitfalls of testing for asymmetric information in insurance markets," LSE Research Online Documents on Economics 65744, London School of Economics and Political Science, LSE Library.
    4. Nathaniel Hendren & Camille Landais & Johannes Spinnewijn, 2021. "Choice in Insurance Markets: A Pigouvian Approach to Social Insurance Design," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 457-486, August.
    5. Amanda E. Kowalski, 2018. "Extrapolation using Selection and Moral Hazard Heterogeneity from within the Oregon Health Insurance Experiment," Cowles Foundation Discussion Papers 2135, Cowles Foundation for Research in Economics, Yale University.
    6. Agarwal, Sumit & Ströbel, Johannes & Chomsisengphet, Souphala & Mahoney, Neale, 2015. "Do Banks Pass Through Credit Expansions? The Marginal Profitability of Consumer Lending During the Great Recession," CEPR Discussion Papers 10839, C.E.P.R. Discussion Papers.
    7. Johannes Spinnewijn, 2017. "Heterogeneity, Demand for Insurance, and Adverse Selection," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 308-343, February.
    8. Casey Rothschild, 2024. "Welfare analysis in insurance markets," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 49(1), pages 36-58, March.
    9. Martin Quinn & Miguel Godinho de Matos & Christian Peukert, 2024. "The Welfare Effects of Mobile Internet Access: Evidence from Roam-Like-at-Home," The Economic Journal, Royal Economic Society, vol. 134(659), pages 1228-1246.
    10. Timothy J. Layton & Randall P. Ellis & Thomas G. McGuire, 2015. "Assessing Incentives for Adverse Selection in Health Plan Payment Systems," NBER Working Papers 21531, National Bureau of Economic Research, Inc.
    11. Michael Geruso & Timothy J. Layton, 2017. "Selection in Health Insurance Markets and Its Policy Remedies," Journal of Economic Perspectives, American Economic Association, vol. 31(4), pages 23-50, Fall.
    12. Matthew Panhans, 2019. "Adverse Selection in ACA Exchange Markets: Evidence from Colorado," American Economic Journal: Applied Economics, American Economic Association, vol. 11(2), pages 1-36, April.
    13. Casey Rothschild & Paul D. Thistle, 2022. "Supply, demand, and selection in insurance markets: Theory and applications in pictures," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(4), pages 419-444, December.
    14. Mark Shepard, 2016. "Hospital Network Competition and Adverse Selection: Evidence from the Massachusetts Health Insurance Exchange," NBER Working Papers 22600, National Bureau of Economic Research, Inc.
    15. Gemmo, Irina & Kubitza, Christian & Rothschild, Casey, 2020. "Constrained efficient equilibria in selection markets with continuous types," Journal of Public Economics, Elsevier, vol. 190(C).
    16. Sumit Agarwal & Souphala Chomsisengphet & Neale Mahoney & Johannes Stroebel, 2018. "Do Banks Pass through Credit Expansions to Consumers Who want to Borrow?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(1), pages 129-190.
    17. Benno Bühler, 2009. "Do International Roaming Alliances Harm Consumers?," Working Papers 2009.93, Fondazione Eni Enrico Mattei.
    18. Liran Einav & Amy Finkelstein, 2023. "Empirical analyses of selection and welfare in insurance markets: a self-indulgent survey," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 48(2), pages 167-191, September.
    19. Alves, Amanda M. & Brousseau, Eric & Mimouni, Nada & Yeung, Timothy Yu-Cheong, 2021. "Competing for policy: Lobbying in the EU wholesale roaming regulation," Telecommunications Policy, Elsevier, vol. 45(3).
    20. Michael Geruso & Timothy Layton & Daniel Prinz, 2019. "Screening in Contract Design: Evidence from the ACA Health Insurance Exchanges," American Economic Journal: Economic Policy, American Economic Association, vol. 11(2), pages 64-107, May.

    More about this item

    Keywords

    price caps; international roaming; mobile telecom; market integration;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_9303. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.