IDEAS home Printed from
   My bibliography  Save this paper

Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the Mobile Telephone Industry


  • Parker, Philip M
  • Röller, Lars-Hendrik


The deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in the hope of increasing competition. One example is the licensing of cellular telephone services in the United States. In the face of scarce radio spectrum, the Federal Communications Commission (FCC) has created duopolies in which two firms are granted licenses to compete in strictly defined product and geographic markets. Rate regulation typically imposed for natural monopolies is forgone because it is believed that two firms provide sufficient competition to prevent collusive pricing. We test this assertion using data collected from the cellular telephone industry in the United States. Taking advantage of the unique regulatory environment, we propose a structural model of market power and test to what degree duopolistic competition leads to competitive market outcomes. We find that cellular prices are significantly above competitive, as well as non-cooperative duopoly levels. Substantial welfare gains can be achieved through price reductions. We also find considerable variance in pricing behaviour across markets and operators. In a second step we explain the identified conduct in terms of various market and organizational structures that might explain competitive behaviour. We find that cross-ownership and multimarket contact are important factors in explaining non-competitive prices. Policy implications are also discussed.

Suggested Citation

  • Parker, Philip M & Röller, Lars-Hendrik, 1994. "Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the Mobile Telephone Industry," CEPR Discussion Papers 989, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:989

    Download full text from publisher

    File URL:
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at

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

    More about this item


    Collusion; Cross-ownership; Duopolistic Competition; Multimarket;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications


    Access and download statistics


    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:cpr:ceprdp:989. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.