Citation

Discussion Paper Details

Please find the details for DP12866 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

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

Author(s): Marc Bourreau, Yutec Sun and Frank Verboven

Publication Date: April 2018

Keyword(s): Entry, fighting brand, Mobile telecommunications, product variety and semi-collusion

Programme Area(s): Industrial Organization

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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12866

Bibliographic Reference

Bourreau, M, Sun, Y and Verboven, F. 2018. 'Market Entry, Fighting Brands and Tacit Collusion: The Case of the French Mobile Telecommunications Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12866