No abstract

No abstract

Abstract:Competitive dynamics research has focused primarily on interactions between dyads of firms. Drawing on the awareness-motivation-capability framework and strategic group theory we extend this by proposing that firms" actions are influenced by perceived competitive pressure resulting from actions by several rivals. We predict that firms" action magnitude is influenced by the total number of rival actions accumulating in the market, and that this effect is moderated by strategic group membership. We test this using data on the German mobile telephony market and find them supported: the magnitude of firm"s actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to strategically similar rivals.

Mobile telecommunication operators routinely charge subscribers lower prices for calls on their own network than for calls to other networks (on-net discounts). Studies on tariffmediated network effects suggest this is due to large operators using on-net discounts to damage smaller rivals. Alternatively, research on strategic discounting suggests small operators use on-net discounts to advertise with low on-net prices. We test the relative strength of these effects using data on tariff setting in German mobile telecommunications between 2001 and 2009. We find that large operators are more likely to offer tariffs with onnet discounts but there is no consistently significant difference in the magnitude of discounts.Our results suggest that tariff-mediated network effects are the main cause of on-net discounts.

No abstract