Market Entry, Fighting Brands and Tacit Collusion: The Case of the French Mobile Telecommunications Market

Frank Verboven, Marc Bourreau and Yutec Sun

No 12866, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbent firms. Using an empirical oligopoly model with differentiated products, we show that the incumbents' launch of the fighting brands can be rationalized only as a breakdown of tacit collusion. In the absence of entry the incumbents successfully colluded on restricting their product variety to avoid cannibalization; the new entry of the low-end competition made such semi-collusion more difficult to sustain because of increased business stealing incentives. Consumers gained considerably from the added variety of the new entrant and the fighting brands, and to a lesser extent from the incumbents' price response to the entry.

Keywords: Entry; Fighting brand; Semi-collusion; Product variety; Mobile telecommunications (search for similar items in EconPapers)
JEL-codes: L13 L96 (search for similar items in EconPapers)
Date: 2018-04
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind, nep-mkt, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://cepr.org/publications/DP12866 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12866

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP12866

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().