Predation and Network Based Price Discrimination in Chile

This paper uses a model of strategic interaction among firms –that set discriminatory and nonlinear prices– together with public information on prices of the plans marketed by the three major mobile phone companies, to assess the extent to which on-net and offnet price differentials in the plans they offer could represent predatory practices in the mobile telephony market in Chile. The results show that these companies offered plans that could present evidence of predatory practices. Despite the fact that these plans were a small fraction of all the plans mobile phone firms offered they were recently banned by the antitrust authority as they represented a relevant fraction of all traffic.