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Bundling and collusion in communications markets

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  • Edmond Baranes
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    Abstract

    This paper deals with competition in communications markets between an incumbent and a competitor. We analyse the effect of bundling strategy by a firm that enters an incumbent market. This market dimension has deep implications on the sustainability of collusion. In an infinitely repeated game framework, we show that the bundling strategy of the entrant might hinder collusion. Furthermore, we consider a setting in which the competitor uses a one-way access that the incumbent possesses. In such a situation, we show that when the competitor bundles its products, a low access charge might increase the feasibility of collusion. This result has an important policy implication.

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    Bibliographic Info

    Article provided by Inderscience Enterprises Ltd in its journal Int. J. of Management and Network Economics.

    Volume (Year): 1 (2009)
    Issue (Month): 4 ()
    Pages: 357-377

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    Handle: RePEc:ids:ijmnec:v:1:y:2009:i:4:p:357-377

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    Web page: http://www.inderscience.com/browse/index.php?journalID==259

    Related research

    Keywords: networks; bundling; access charge; unbundling local loop; collusion; telecommunications; competition; regulation; differentiation; communications markets; management.;

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