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Customer Service Quality and Incomplete Information in Mobile Telecommunications: A Game Theoretical Approach to Consumer Protection

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Abstract

There is growing evidence that low-quality customer service prevails in the mobile telecommunications industry. In this paper we provide theoretical support to this empirical observation by using simple game theoretical models where inefficient low-quality service levels are part of an equilibrium strategy for the firms. We also find that the inefficiency is due to a demand-side market failure generated by incomplete information, and that it does not necessarily vanish with competition or with repeated interaction. This is particularly important in terms of policy implications because it suggests that the inefficiency should be solved through regulation via consumer protection.

Suggested Citation

  • Rafael López Zorzano & Teodosio Pérez-Amaral & Teresa Garín-Muñoz & Covadonga Gijón Tascón, 2012. "Customer Service Quality and Incomplete Information in Mobile Telecommunications: A Game Theoretical Approach to Consumer Protection," Documentos de Trabajo del ICAE 2012-23, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    • Handle: RePEc:ucm:doicae:1223
    Note: The authors wish to thank helpful comments from participants at the 23rd European Regional Conference of the International Telecommunication Society, held in July 2012 at Vienna University of Economics and Business. Corresponding author: Rafael López Zorzano, ralopez@ccee.ucm.es
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    References listed on IDEAS

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    More about this item

    Keywords

    Mobile telecommunications; Consumer protection; Game theory; Customer services; Competition; Oligopoly; Market failure; Experience goods; Incomplete information.;
    All these keywords.

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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