The Strength of the Waterbed Effect Depends on Tariff Type

We show that the waterbed effect, i.e. the pass-through of a change in one price of a firm to its other prices, is much stronger if the latter include subscription rather than only usage fees. In particular, in mobile network competition with a fixed number of customers, the waterbed effect is full under two-part tariffs, while it is only partial under linear tariffs. JEL codes: D43, L13, L51

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Year of publication:	2014
Authors:	Hoernig, Steffen
Institutions:	Faculdade de Economia, Universidade Nova de Lisboa
Subject:	Waterbed effect \| two-part tariff \| linear tariff \| mobile termination \| two-sided platforms

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Series:	FEUNL Working Paper Series.
Type of publication:	Book / Working Paper
Notes:	10 pages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010898254