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The political economy analysis of the mobile phone subsidy

이동통신 보조금의 정치경제학적 분석

  • Received : 2015.05.04
  • Accepted : 2015.06.11
  • Published : 2015.08.31

Abstract

The government has the responsibility to prevent abuses of monopoly and promote competition in order to maximize consumer welfare. The government should address the asymmetry in the information as much as possible and ensure consumer choice. The subsidy seems to reduce the burden on the consumer service charges and handset prices but it actually distorts the market through price discrimination. The government caused the principal-agent problem by neglecting their appropriate role to prevent distortion of the mobile telecom market. The money used as subsidy is part of excess profit and could be transferred to down the price of mobile phone and charges and it would become a benefit to consumers. Separate announcement of subsidies by Mobile Communications Terminal Distribution Structure Improvement Act is a little developed policy but it was not actually realized. The market price close to that from perfect competition structure is plausible, ultimately.

Keywords

Mobile telecommunication phone;Cell phone;Subsidy;Price Discrimination;Principal-agent;Political Economy;Mobile Communications Terminal Distribution Structure Improvement Act;Separate Announcement

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