IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v46y2022i2s0308596121001634.html
   My bibliography  Save this article

What do we know about duopolies? Insights from the history of cellular phones

Author

Listed:
  • Garcia-Vicente, Nicolas
  • Garcia-Swartz, Daniel D.
  • Campbell-Kelly, Martin

Abstract

The theoretical literature on duopolies—the Bertrand and Cournot models and their variants—generates a range of predictions for equilibrium prices and quantities depending on assumptions. Here we compare behavior in cellular-network services across countries in the 1980s and early 1990s. We study transitions from monopoly to duopoly and from duopoly to oligopoly with more than two competitors. Through comparisons across countries and time periods, we isolate factors that explain why duopolistic competition had a larger impact on prices in certain markets than in others. Among other things, we find that two institutional factors played an important role: the way beauty contests for additional licenses were designed and whether duopolists expected additional entry into the network-services market or not.

Suggested Citation

  • Garcia-Vicente, Nicolas & Garcia-Swartz, Daniel D. & Campbell-Kelly, Martin, 2022. "What do we know about duopolies? Insights from the history of cellular phones," Telecommunications Policy, Elsevier, vol. 46(2).
    • Handle: RePEc:eee:telpol:v:46:y:2022:i:2:s0308596121001634
    DOI: 10.1016/j.telpol.2021.102259
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596121001634
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.telpol.2021.102259?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Valletti, Tommaso M & Cave, Martin, 1998. "Competition in UK mobile communications," Telecommunications Policy, Elsevier, vol. 22(2), pages 109-131, March.
    2. Meghan R. Busse, 2000. "Multimarket Contact and Price Coordination in the Cellular Telephone Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(3), pages 287-320, June.
    3. Jeffrey L. Funk, 2002. "Global Competition Between and Within Standards," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28886-7.
    4. Hausman, Jerry, 1999. "Cellular Telephone, New Products, and the CPI," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(2), pages 188-194, April.
    5. Kenneth G. Elzinga & David E. Mills, 2011. "The Lerner Index of Monopoly Power: Origins and Uses," American Economic Review, American Economic Association, vol. 101(3), pages 558-564, May.
    6. Lindenberg, Eric B & Ross, Stephen A, 1981. "Tobin's q Ratio and Industrial Organization," The Journal of Business, University of Chicago Press, vol. 54(1), pages 1-32, January.
    7. Gruber,Harald, 2005. "The Economics of Mobile Telecommunications," Cambridge Books, Cambridge University Press, number 9780521843270.
    8. Philip M. Parker & Lars-Hendrik Roller, 1997. "Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the Mobile Telephone Industry," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 304-322, Summer.
    9. Neil Gandal, 2003. "New Horizons: Telecommunications Policy In Israel In The 21st Century," Israel Economic Review, Bank of Israel, vol. 1(2), pages 101-111.
    10. Schejter, Amit M., 2006. "Israeli cellular telecommunications policy," Telecommunications Policy, Elsevier, vol. 30(1), pages 14-28, February.
    11. Oecd, 1996. "Mobile Cellular Communication: Pricing Strategies and Competition, ICCP No. 39," OECD Digital Economy Papers 23, OECD Publishing.
    12. Stoetzer, Matthias-W & Tewes, Daniel, 1996. "Competition in the German cellular market? Lessons of duopoly," Telecommunications Policy, Elsevier, vol. 20(4), pages 303-310, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joshua S. Gans & Stephen P. King & Julian Wright, 2005. "Wireless Communications," Monash Economics Working Papers archive-45, Monash University, Department of Economics.
    2. Faouzi Bensebaa, 2003. "La dynamique concurrentielle:défis analytiques et méthodologiques," Revue Finance Contrôle Stratégie, revues.org, vol. 6(1), pages 5-37, March.
    3. Garcia-Gallego, Aurora & Georgantzis, Nikolaos & Gil-Molto, Maria Jose & Orts, Vicente, 2006. "Game-theoretic aspects of international mergers: Theory and case studies," International Review of Law and Economics, Elsevier, vol. 26(3), pages 395-409, September.
    4. Eugenio J. Miravete, 2004. "The Doubtful Profitability of Foggy Pricing," Working Papers 04-07, NET Institute.
    5. Hinloopen, J. & Smrkolj, G. & Wagener, F.O.O., 2013. "In Defense of Trusts: R&D Cooperation in Global Perspective," CeNDEF Working Papers 13-05, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    6. Gruber, Harald & Verboven, Frank, 2001. "The evolution of markets under entry and standards regulation -- the case of global mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1189-1212, July.
    7. Javier Coronado & Sergi Jiménez-Martín & Pedro L Marín, 2007. "Multimarket Contact in Pharmaceutical Markets," Working Papers 303, Barcelona School of Economics.
    8. Germeshausen, Robert & Panke, Timo & Wetzel, Heike, 2014. "Investigating the influence of firm characteristics on the ability to exercise market power: A stochastic frontier analysis approach with an application to the iron ore market," ZEW Discussion Papers 14-105, ZEW - Leibniz Centre for European Economic Research.
    9. Eugenio J. Miravete, 2009. "Competing with Menus of Tariff Options," Journal of the European Economic Association, MIT Press, vol. 7(1), pages 188-205, March.
    10. Ciliberto, Federico & Williams, Jonathan, 2010. "Does Multimarket Contact Facilitate Tacit Collusion? Inference on Conjectural Parameters in the Airline Industry," MPRA Paper 24888, University Library of Munich, Germany.
    11. Miravete, Eugenio, 2004. "Are all those Calling Plans Really Necessary? The Limited Gains From Complex Tariffs," CEPR Discussion Papers 4237, C.E.P.R. Discussion Papers.
    12. Karamti, Chiraz, 2019. "Lopsided effects of telecom reforms on mobile markets in the enlarged EU: Evidence from dynamic quantile model," Telecommunications Policy, Elsevier, vol. 43(3), pages 238-261.
    13. repec:zbw:rwirep:0017 is not listed on IDEAS
    14. Corrocher, Nicoletta & Zirulia, Lorenzo, 2010. "Demand and innovation in services: The case of mobile communications," Research Policy, Elsevier, vol. 39(7), pages 945-955, September.
    15. Wellmann, Nicolas, 2019. "Hello . . . Are You Still There? An Empirical Analysis How Market Structure Affects Quality of Mobile Networks," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203579, Verein für Socialpolitik / German Economic Association.
    16. Iwan Bos & Ronald Peeters, 2023. "Price Competition in a Vertizontally Differentiated Duopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(3), pages 219-239, May.
    17. Katja Seim & V. Brian Viard, 2011. "The Effect of Market Structure on Cellular Technology Adoption and Pricing," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 221-251, May.
    18. Øystein Foros & Bjørn Hansen & Jan Sand, 2002. "Demand-side Spillovers and Semi-collusion in the Mobile Communications Market," Journal of Industry, Competition and Trade, Springer, vol. 2(3), pages 259-278, September.
    19. Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers 2008/8, Institut d'Economia de Barcelona (IEB).
    20. Gruber, Harald & Verboven, Frank, 2001. "The diffusion of mobile telecommunications services in the European Union," European Economic Review, Elsevier, vol. 45(3), pages 577-588, March.
    21. Tomaso Duso, 2005. "Lobbying and regulation in a political economy: Evidence from the U.S. cellular industry," Public Choice, Springer, vol. 122(3), pages 251-276, March.

    More about this item

    Keywords

    Duopoly; Cellular network services; Cross-country comparisons;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:telpol:v:46:y:2022:i:2:s0308596121001634. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.