00000nam 2200000zi 4500 9.886481 CaOODSP 20221107171430 m o d f cr cn||||||||| 200428t20202020onca ob f000 0 eng d CaOODSP eng rda CaOODSP n-us--- y0y1 FB3-5/2020-9E-PDF Cullen, Joseph (Joseph A.) author. Welfare analysis of equilibria with and without early termination fees in the US wireless industry / by Joseph Cullen, Nicolas Schutz and Oleksandr Shcherbakov. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 1 online resource (ii, 47 pages) : illustrations. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-9 "Last updated: March 23, 2020." Includes bibliographical references (pages 34-35). "We study the social welfare implications of early termination fees in the US wireless industry. It is hypothesized that the elimination of long-term contracts at the end of 2015 was a transition from one market equilibrium to another. We use a theoretical model to illustrate that the endogenous choice of consumer switching costs by service providers does not necessarily raise firms' profits or hurt consumers. The forward-looking behavior of consumers facing switching costs results in significant downward pressure on prices. Service fees may be so low that consumers are better off and firms are worse off in an equilibrium with switching costs. Empirically, we find that without early termination fees, firms would increase prices by 2 to 5 percent, on average, resulting in an unambiguous increase in consumer surplus. Firms' profits derived from monthly service fees also increase. However, if we consider additional revenues from contract termination payments, the cost of processing these payments should be large enough for producer profits to be higher in the new equilibrium"--Abstract, page ii. Cell phone services industry Rates United States Econometric models. Téléphone cellulaire Industrie Tarifs États-Unis Modèles économétriques. Bank of Canada. Staff working paper (Bank of Canada) 2020-9. (CaOODSP)9.806221 PDF 955 KB https://publications.gc.ca/collections/collection_2020/banque-bank-canada/FB3-5-2020-9-eng.pdf