Bundling and Collusion on Communications Markets
AbstractThis paper deals with competition in communications markets between an incumbent and an entrant. We analyze the effect of bundling strategy by a firm who enters an incumbent market. This market dimension has profound implications on the sustainability of collusion in an infinitely repeated game framework. We show that the bundling strategy of the entrant might hinder collusion. Futhermore, we consider a setting in which the entrant uses a one-way access that the incumbent possesses. In such situation, we show that when the entrant bundles its products, a low access charge for call termination on the incumbent network might increase the feasibility of collusion. This result has an important policy implication.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 06-17.
Length: 28 pages
Date of creation: Oct 2006
Date of revision: Oct 2006
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Web page: http://www.NETinst.org/
Bindling; Collusion; Differentiation.;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-12 (All new papers)
- NEP-COM-2006-11-12 (Industrial Competition)
- NEP-ICT-2006-11-12 (Information & Communication Technologies)
- NEP-MIC-2006-11-12 (Microeconomics)
- NEP-NET-2006-11-12 (Network Economics)
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