In this paper we study how a reduction of consumer switching costs may affect market competition in the wireless telecommunication industry. The reduction of switching costs can be achieved through the implementation of a regulatory policy called Wireless Number Portability (WNP) that allows consumers to retain the same phone numbers when they switch service providers. By r educing consumers' switching costs, WNP was intended to intensify price competition and facilitate the growth of new service providers. However, our analysis shows that, when networks incur interconnection costs, a reduction of switching costs may accelerate the process of market concentration. With positive interconnection costs, the networks charge lower usage fees for the calls within the same networks than for calls between the networks. Such network-based price discounts provide the large network with a competitive advantage because its subscribers are more likely to enjoy price discounts than the subscribers to a small network. Consequently, subscription to the large network can become more attractive even though the large network charges higher fees to exploit the consumers' switching costs. We relate our analytical results to the empirical evidence from the Hong Kong market where WNP was adopted in March of 1999.

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Though recent studies show that quality differentiation is an equilibrium outcome, products of similar qualities frequently are observed in the marketplace. This inconsistency may be explained by incorporating consumer heterogeneity along unobservable attributes into a model of competition. In this paper, consumers not only take into account the quality and price of a product but also their heterogeneous tastes along other attributes which are unobservable to firms. We investigate the effect of heterogeneity along the unobservable attributes on both quality and price equilibrium in a two-stage game framework. We show that when consumers are sufficiently heterogeneous along the unobservable attributes, the firms offer products of identical qualities in equilibrium. Under low levels of heterogeneity along the unobservable attributes, however, our results are consistent with past research which argues for quality differentiation.consumer heterogeneity, quality, unobservable attributes, logit, two-stage game, quality differentiation, unique versus identical qualities

New pyrrolic viscosity sensors exhibit one order of magnitude higher fluorescence contrast compared to that of the conventional phenolic analogues due to the viscosity-sensitive rotation of the asymmetric pyrrole group and successfully demonstrate mapping of intracellular viscosity by fluorescence lifetime imaging microscopy.