Double marginalization problems: evidence from the Korean fixed-to-mobile service market

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In this paper, examination of the possibility of a 'double marginalization' problem existing in the Korean telecommunication industry is conducted and suggestions are made for the provision of a new scheme to eliminate this possibility by changing the pricing system for fixed-to-mobile calls. Based on five key economic characteristics in the Korean mobile market, a simple model for double marginalization in the telecommunication market is introduced. Evidence was found to suggest that a double, marginalization problem is likely to exist within Korea's telecommunication industry as it is presently structured, and that this problem is further likely to have an adverse effect on the industry by inflating the price of fixed-to-mobile calls. Two alternatives are proposed to effectively remedy this double marginalization issue. It is also shown that prices of fixed-to-mobile calls could be lowered by changing the caller pays principle into a receiver pays principle. (C) 2002 Elsevier Science Ltd. All rights reserved.
Publisher
ELSEVIER SCI LTD
Issue Date
2002-12
Language
English
Article Type
Article
Keywords

INTERCONNECTION; COMPETITION

Citation

TELECOMMUNICATIONS POLICY, v.26, pp.607 - 621

ISSN
0308-5961
URI
http://hdl.handle.net/10203/81576
Appears in Collection
MG-Journal Papers(저널논문)
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