A Proposal of Price Regulation Plan for Telecommunication Company of Iran

In a monopoly, monopolist because of the market power –if consumers desire to pay- can charge high prices for its products or services, and consequently can supply the low quality productions in high prices. So, the intervention of a regulator to protect the consumers’ interests is necessary. Because of the monopoly structure of the Iranian Telecommunication Industry -even after transferring to private sector- this study offers a price cap regulation plan for regulating the Telecommunication Company of Iran. In fact, presenting a classification for its services, this study determines a price cap for services baskets of Telecommunication Company of Iran, so that diminish its monopoly power and propel its prices to fair prices that are the aim of economic regulation. The aim of this study is no calculation, but proposing a model. Regulator can use the model via substitution of data. However, an example is represented to understand the model.