Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Economic Effects of Handset Subsidy in Newly Emerging Telecommunication Markets

Vol.17, No.3, September , 1–40


English Version |  Korean Version
  •   (Kookmin University)

  •   (Chung-Ang University)

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Abstract  

This paper develops a two-period sequential choice model to analyze the effects of handset subsidy in newly emerging telecommunication markets. Handset subsidy can be used as a device for internalizing static and dynamic externality problems which exist between handset and service providers. According to this paper, allowing handset subsidy increases the profit of handset provider but has negative effects on the profit of service provider, consumer surplus and social welfare.


Keywords
   Handset Subsidy, Newly Emerging Service Market, Handset Market, Externality

JEL classification codes
   D4, L1, L5, L8
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