Bundling and Collusion in Communications Markets

29 Pages Posted: 2 Nov 2006

See all articles by Edmond Baranes

Edmond Baranes

University of Montpellier, MRE

Date Written: November 2006

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.

Keywords: Bindling, Collusion, Differentiation

JEL Classification: D43, L13, L9

Suggested Citation

Baranes, Edmond, Bundling and Collusion in Communications Markets (November 2006). NET Institute Working Paper No. 06-17, Available at SSRN: https://ssrn.com/abstract=941189 or http://dx.doi.org/10.2139/ssrn.941189

Edmond Baranes (Contact Author)

University of Montpellier, MRE ( email )

Av Raymond Dugrand
Montpellier Cedex, Cedex 2 34960
France

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