Two-Part Tariff in The Mobile Phone Industry

• Main Authors: I-ping Chang Chien, 張簡憶萍
• Other Authors: Jiunn-hsiung Liao
• Format: Others
• Language: zh-TW
• Published: 2000
• Online Access: http://ndltd.ncl.edu.tw/handle/81857076121164798241

碩士 === 國立成功大學 === 交通管理學系 === 88 === The mobile phone is very popular in people daily life today. The users of mobile phone have gone beyond those of local phone. Most firms in the mobile phone industry charge a monthly rental fee and a usage price per unit ( so called Two-Part-Tariff ) which is different from traditional single pricing. In order to implement the pricing strategies in two part tariff effectively, there are several questions needed to be answered. They are : (1)What is the strategic incentive of the firms in the indusrty for using the pricing strategies in two part tariff ? (2)What kind of pricing strategies among all two-part tariffs are the most profitable for the firms? (3)What kind of pricing strategy is the best in the point views of social welfare? These solutions should provide some hints for Bureau of Telecommunication-regulator body in telecom industry of Taiwan. The main purpose of this research is intended to answer the above-mention questions. First, we analyze the supply side and the demand side in telecom industry and develop an economic model considering the heterogeniety of consumers and the scale economies in production. We consider four possible ( Uniform and Non-uniform ) two-part tariff strategies of the firm and find the equilibrium of the model in each case. Then we compare the results and discuss the profit-maximizing pricing strategies of the firms. Finally, we find the social best rental fee and usage price per unit. There are three major results in this study. First, the firms in the mobile phone industry employ two part tariff pricing strategies since it helps extract consumer surplus and improve firm’s profit. Second, whether it is profitable for firm to use uniform or non-uniform two part tariff depends on a certain condition. Third, we derive how the rental fee and usage price should be set in the point view of social welfare.