Is the French mobile phone cartel really a cartel?
France Telecom (FT), SFR and Bouygues Telecom (BT) have been fined by France’s Conseil de la Concurrence (CC) for organizing a mobile phone cartel with stable market shares (one-half, one-third and one-sixth respectively) and for directly exchanging commercial information. While not contesting the legal decision, it is argued here that the economic reasoning is flawed. 1) As the CC made much of the firms’ stable market shares, we have first followed this line of reasoning by considering that the market shares are quotas under uniform costs. Even if there is a general incentive to form a monopolistic cartel, BT was too small for it to be worth its while to join it; it is not necessary to exchange information directly to coordinate market shares and prices effectively; all partial cartels are unlikely. 2) We then considered that the non-uniform market shares are explained by the costs in Cournot competition which can be deduced from the observed market shares by assuming that the costs are kept the same when switching from Cournot competition to any form of cartel. We deduced that market shares cannot be other than stable and non-uniform; any monopoly is unlikely to come about, because FT has negative incentives to form a monopolistic cartel; no partial cartels of two operators are viable because at least one member would lose out. The paper also shows that Stackelberg competition is unlikely as well as Bertrand-Edgeworth competition. In conclusion, Cournot competition is the only arrangement that guarantees no losses to all operators.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: Pôle d'Economie et de Gestion - 2, bd Gabriel - BP 26611 - F-21066 Dijon cedex - France|
Phone: 00 333 80 39 54 41
Fax: 00 333 80 39 54 43
Web page: http://www.leg.u-bourgogne.fr/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stigler, George J., 1983. "The Organization of Industry," University of Chicago Press Economics Books, University of Chicago Press, edition 0, number 9780226774329, July.
- Osborne, Dale K, 1976. "Cartel Problems," American Economic Review, American Economic Association, vol. 66(5), pages 835-44, December.
- Osborne, D K, 1978. "Cartel Problems: Reply," American Economic Review, American Economic Association, vol. 68(5), pages 947-49, December.
- Donsimoni, Marie-Paule & Economides, Nicholas S & Polemarchakis, Herakles M, 1986. "Stable Cartels," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 317-27, June.
- Robert Porter, 2005. "Detecting Collusion," Review of Industrial Organization, Springer, vol. 26(2), pages 147-167, December.
- Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, vol. 56(3), pages 571-99, May.
- Arnold Heertje, 1996. "On Stackelberg’s oligopoly theory," Journal of Economic Studies, Emerald Group Publishing, vol. 23(5/6), pages 48-57, October.
- Eckert, Andrew & West, Douglas S, 2004. "Retail Gasoline Price Cycles across Spatially Dispersed Gasoline Stations," Journal of Law and Economics, University of Chicago Press, vol. 47(1), pages 245-73, April.
- Cave, Jonathan & Salant, Stephen W, 1995.
"Cartel Quotas under Majority Rule,"
American Economic Review,
American Economic Association, vol. 85(1), pages 82-102, March.
- Groot, A.M. & Withagen, C.A.A.M. & de Zeeuw, A.J., 1996.
"Strong Time-Consistency in the Cartel-versus-Fringe Model,"
1996-22, Tilburg University, Center for Economic Research.
- Groot, Fons & Withagen, Cees & de Zeeuw, Aart, 2003. "Strong time-consistency in the cartel-versus-fringe model," Journal of Economic Dynamics and Control, Elsevier, vol. 28(2), pages 287-306, November.
- Groot, F. & Withagen, C.A.A.M. & de Zeeuw, A.J., 2003. "Strong time-consistency in the cartel-versus-fringe model," Other publications TiSEM 5ba46a2e-d763-4a8c-939b-3, Tilburg University, School of Economics and Management.
- Tsai, Hsiang-Chih & Chen, Chun-Mei & Tzeng, Gwo-Hshiung, 2006. "The comparative productivity efficiency for global telecoms," International Journal of Production Economics, Elsevier, vol. 103(2), pages 509-526, October.
- Ganslandt, Mattias & Persson, Lars & Vasconcelos, Helder, 2008. "Asymmetric Cartels - a Theory of Ring Leaders," CEPR Discussion Papers 6829, C.E.P.R. Discussion Papers.
- Buccirossi Paolo, 2006. "Does Parallel Behavior Provide Some Evidence of Collusion?," Review of Law & Economics, De Gruyter, vol. 2(1), pages 85-102, July.
- ELLEFLAMME, Paul & BLOCH, Francis, .
"Market sharing agreements and collusive networks,"
CORE Discussion Papers RP
1711, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Holahan, William L, 1978. "Cartel Problems: Comment," American Economic Review, American Economic Association, vol. 68(5), pages 942-46, December.
- Gastaldi, Massimo & Levialdi, Nathan, 1998. "Strategic planning for long-distance telecommunications: A symbiotic production system," International Journal of Production Economics, Elsevier, vol. 56(1), pages 179-189, September.
- Bloch, Francis, 2002. "Coalitions and Networks in Industrial Organization," Manchester School, University of Manchester, vol. 70(1), pages 36-55, January.
- Mora R. Jhon James, 2006. "Cournot's model applied to cellphone service in Colombia, 1995-2001," Journal of Economic Studies, Emerald Group Publishing, vol. 33(6), pages 469-477, November.
- Harrington, Joseph Jr., 1989. "Collusion among asymmetric firms: The case of different discount factors," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 289-307, June.
- Mills, David E & Elzinga, Kenneth G, 1978. "Cartel Problems: Comment," American Economic Review, American Economic Association, vol. 68(5), pages 938-41, December.
- Christodoulopoulos, Th., 1995. "Telecommunications in Greece: A study of production structure and natural monopoly issue," International Journal of Production Economics, Elsevier, vol. 38(2-3), pages 147-157, March.
- Gallo, Paolo & Luciano, Elisa & Peccati, Lorenzo, 1997. "Revision of industrial supply conditions and game theory," International Journal of Production Economics, Elsevier, vol. 49(1), pages 17-28, March.
- Dai, Yue & Chao, Xiuli & Fang, Shu-Cherng & Nuttle, Henry L.W., 2005. "Pricing in revenue management for multiple firms competing for customers," International Journal of Production Economics, Elsevier, vol. 98(1), pages 1-16, October.
- Cricelli, Livio & Gastaldi, Massimo & Levialdi, Nathan, 2001. "Strategic behaviours in international telecommunications system," International Journal of Production Economics, Elsevier, vol. 69(2), pages 141-149, January.
When requesting a correction, please mention this item's handle: RePEc:lat:legeco:e2009-02. 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: (Odile Ferry)
If references are entirely missing, you can add them using this form.