The iPhone goes downstream: mandatory universal distribution

Larry Karp and Jeffrey Perloff

No 123636, CUDARE Working Papers from University of California, Berkeley, Department of Agricultural and Resource Economics

Abstract: Apple’s original decision to market iPhones using a single downstream vendor prompted calls for mandatory universal distribution (MUD), whereby all downstream vendors would sell the iPhone under the same contract terms. The upstream monopoly may want either one or more downstream vendors, and, in either case, consumer welfare may be higher with either one or more firms. If the income elasticity of demand for the new good is greater than the income elasticity of the existing generic good, the MUD requirements leads to a higher equilibrium price for both the new good and the generic, and therefore lowers consumer welfare.

Keywords: Institutional; and; Behavioral; Economics (search for similar items in EconPapers)
Pages: 35
Date: 2011-12-15
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucbecw:123636

DOI: 10.22004/ag.econ.123636

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