Bundling and Collusion on Communications Markets

Edmond Baranes ()
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Edmond Baranes: University of Montpellier

No 06-17, Working Papers from NET Institute

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. (search for similar items in EconPapers)
JEL-codes: D43 L13 L9 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-10, Revised 2006-10
New Economics Papers: this item is included in nep-com, nep-ict, nep-mic and nep-net
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