Resource title

Collusive conduct in duopolies: multimarket contact and cross-ownership in the mobile telephone industry

Resource image

image for OpenScout resource :: Collusive conduct in duopolies: multimarket contact and cross-ownership in the mobile telephone industry

Resource description

The deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in hopes of increasing competition. One example is the licensing of cellular telephone service in the United States. In the face scarce radio spectrum, the FCC has created duopolies in which two firms are granted licenses to compete in strictly defined product and geographic markets. Rate regulation typically imposed for natural monopolies are foregone based on the belief that two firms provide sufficient competition and prvent collusive pricing. We test this assertion using data collected from the cellular telephone industry in the United States. Taking advantage of the unique duopolistic competition leads to competitive markets outcomes. We find that cellular prices are significantly above competitive, as well as non-cooperative diopoly levels. Substantial welfare gains can be achieved through price reduction...

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp1994/94-22.pdf

Resource license

Copyright INSEAD. All rights reserved