Working Paper: CEPR ID: DP6224
Authors: Marc Bourreau; Johan Hombert; Jérôme Pouyet; Nicolas Schutz
Abstract: In telecommunications some operators have deployed their own networks whereas some others have not. The latter firms must purchase wholesale products from the former to be able to compete on the final market. We show that, even when network operators compete in prices and offer perfectly homogenous products on the wholesale market, that market may not be competitive. Based on our theoretical analysis, we derive some policy implications for the broadband and the mobile telephony markets.
Keywords: telecommunications; upstream and downstream markets; vertical integration
JEL Codes: L13; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| integrated firms' pricing strategies (L11) | competitiveness of the upstream market (L13) |
| upstream pricing influences downstream competition (L11) | accommodation effect (D16) |
| accommodation effect (D16) | non-competitive equilibria (D59) |
| accommodation effect (D16) | monopolylike equilibria (D42) |
| downstream products are strong substitutes (L19) | pronounced accommodation effect (H31) |
| regulatory interventions must consider upstream and downstream interactions (L59) | unintended consequences (D62) |