What Mobile Termination Regime for Asymmetric Firms with a Calling Club Effect?

The aim of our paper is to determine the efficiency of asymmetric regulation of mobile termination rates (MTRs) in a market where firms are differentiated in size and with commercial offers including calling club effects. Major regulatory issues are related to these analyses, since some European National Regulatory Authorities and the European Commission tend to question asymmetric regulation mechanisms. Based on a model designed to determine firm profits and consumer surplus, our main results are the following: a) Asymmetric regulation of MTRs may contribute to increase welfare. If the impact is neutral regarding firms (simple reallocation of profits from the large to the small player), consumer surplus is increased; b) The appropriate way to proceed is to decrease the large firm's MTRs, rather than increasing the smaller firm's ones, which could produce negative side effects; c) From a dynamic point of view, appropriate asymmetric regulation may contribute to balance market shares and, in such a way, to compensate first mover advantages