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Bundling and Collusion on Communications Markets

Author

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  • Edmond Baranes

    (University of Montpellier)

Abstract

This 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.

Suggested Citation

  • Edmond Baranes, 2006. "Bundling and Collusion on Communications Markets," Working Papers 06-17, NET Institute, revised Oct 2006.
    • Handle: RePEc:net:wpaper:0617
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    File URL: http://www.netinst.org/Baranes.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Bindling; Collusion; Differentiation.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - 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

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