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Mobile only users powered by fixed-mobile substitution

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  • Liangy, Julienne
  • Petulowa, Marc
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    Abstract

    In a context of partial �fixed-mobile substitution, we analyze �fixed-mobile bundling and mobile-to-�fixed off-loading in a duopoly model in which consumers buy one or two products. A joint purchase discount mitigates �fixed-mobile substitutability and consequently reduces mobile-only and fixed-only consumers. Practises like introducing a small discount, applied on a bundle of multiple service or mobile-to-�fixed off�loading by both operators are analysed. We �nd that such practises do not have negative impacts on the profi�ts of whole market and lead to both consumers' surplus and welfare gains. The investment incentives in �xed network are positive and can be boosted by FM bundling without considering regulatory intervention and before taking into account of �fixed costs. The investment incentives in mobile network are more likely a situation of prisoners' dilemma where operators should invest as long as there are mobile-only consumers. --

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    Bibliographic Info

    Paper provided by International Telecommunications Society (ITS) in its series 23rd European Regional ITS Conference, Vienna 2012 with number 60363.

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    Date of creation: 2012
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    Handle: RePEc:zbw:itse12:60363

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    1. Joshua S. Gans & Stephen P. King, 2006. "PAYING FOR LOYALTY: PRODUCT BUNDLING IN OLIGOPOLY -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 54(1), pages 43-62, 03.
    2. Chen, Yongmin, 1997. "Equilibrium Product Bundling," The Journal of Business, University of Chicago Press, vol. 70(1), pages 85-103, January.
    3. Matutes, Carmen & Regibeau, Pierre, 1992. "Compatibility and Bundling of Complementary Goods in a Duopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 37-54, March.
    4. McAfee, R Preston & McMillan, John & Whinston, Michael D, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 371-83, May.
    5. Adams, William James & Yellen, Janet L, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, MIT Press, vol. 90(3), pages 475-98, August.
    6. John Thanassoulis, 2007. "Competitive Mixed Bundling and Consumer Surplus," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 437-467, 06.
    7. Carbajo, Jose & de Meza, David & Seidmann, Daniel J, 1990. "A Strategic Motivation for Commodity Bundling," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 283-98, March.
    8. Barth, Anne-Kathrin & Heimeshoff, Ulrich, 2012. "Does the growth of mobile markets cause the demise of fixed networks? Evidence from the European Union," DICE Discussion Papers 42, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    9. Wolfgang Briglauer & Anton Schwarz & Christine Zulehner, 2011. "Is fixed-mobile substitution strong enough to de-regulate fixed voice telephony? Evidence from the Austrian markets," Journal of Regulatory Economics, Springer, vol. 39(1), pages 50-67, February.
    10. Rodini, Mark & Ward, Michael R. & Woroch, Glenn A., 0. "Going mobile: substitutability between fixed and mobile access," Telecommunications Policy, Elsevier, vol. 27(5-6), pages 457-476, June.
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