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Mobile only users powered by fixed-mobile substitution

  • Liangy, Julienne
  • Petulowa, Marc
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    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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    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
    Date of revision:
    Handle: RePEc:zbw:itse12:60363
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    1. 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.
    2. 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.
    3. John Thanassoulis, 2007. "Competitive Mixed Bundling and Consumer Surplus," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 437-467, 06.
    4. Barth, Anne-Kathrin & Heimeshoff, Ulrich, 2011. "Does the growth of mobile markets cause the demise of fixed networks? Evidence from the European Union," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52144, International Telecommunications Society (ITS).
    5. Chen, Yongmin, 1997. "Equilibrium Product Bundling," The Journal of Business, University of Chicago Press, vol. 70(1), pages 85-103, January.
    6. repec:tpr:qjecon:v:90:y:1976:i:3:p:475-98 is not listed on IDEAS
    7. 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.
    8. repec:tpr:qjecon:v:104:y:1989:i:2:p:371-83 is not listed on IDEAS
    9. 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.
    10. 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.
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