Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the Mobile Telephone Industry

With the deregulation of the telecommunications industry, a variety of industry structures have been created in hopes of increasing competition. One example is the licensing of cellular telephone services in the United States, where the FCC created duopolies in which two firms were granted licenses...

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Bibliographic Details
Published in:The Rand journal of economics 1997-07, Vol.28 (2), p.304-322
Main Authors: Parker, Philip M., Röller, Lars-Hendrik
Format: Article
Language:English
Subjects:
Air transportation industry
Business structures
Cell phones
Cellular telephones
Collusion
Competition
Duopolies
Duopoly
Industrial market
Industrial regulation
Marginal costs
Market prices
Market structure
Monopoly
Owners
Regulated industries
Studies
Telecommunications industry
Telephone
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Summary:With the deregulation of the telecommunications industry, a variety of industry structures have been created in hopes of increasing competition. One example is the licensing of cellular telephone services in the United States, where the FCC created duopolies in which two firms were granted licenses to compete in strictly defined product and geographic markets. Taking advantage of the unique regulatory environment, we test to what degree duopolistic competition leads to competitive market outcomes. We find that cross-ownership and multimarket contact are important factors in explaining noncompetitive prices.
ISSN:0741-6261
1756-2171
DOI:10.2307/2555807