More for less : on consumer rationality and bargaining power on telecommunication markets

Abstract

We analyse the large scale agent-based model of a prepaid telecommunication market with oligopolistic competition, heterogeneous calling patterns and different levels of agent rationality. We apply innovative implementation approach of utilizing high performance CUDA computing devices which allows us to consider population of up to 1 million consumers. We measure influence of a call graph structure, intra-family network choice coordination and agent rationality level on the market equilibrium. We discover that boundedly rational subscribers, who exploit simple decision heuristics to coordinate network choice within closed user groups, exert much stronger pressure on suppliers than fully rational ones. This leads to lower average calling costs, increased welfare and decreased monopolistic power of operators. We also observe asymmetry in operator margins and volume of on-net and off-net calls in accordance with empirical facts.