Testing the “Waterbed” Effect in Mobile Telephony¶
Genakos, C., & Valletti, T. (2011). Testing the “Waterbed” Effect in Mobile Telephony. Journal of the European Economic Association, 9(6), 1114-1142.
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Mechanisms¶
- Platform Policy Harmonization
- But pressing a rule down in one segment tends to push the behavior into another — the waterbed effect, where suppressing an activity in one place makes it bulge up elsewhere unless the whole surface is leveled at once.
This sourceFinds that regulation lowering mobile termination charges was associated with higher retail prices for mobile subscribers, an empirically measured waterbed effect.
- But pressing a rule down in one segment tends to push the behavior into another — the waterbed effect, where suppressing an activity in one place makes it bulge up elsewhere unless the whole surface is leveled at once.
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