nep-ind New Economics Papers
on Industrial Organization
Issue of 2007‒06‒18
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Reciprocity, Inequity Aversion, and Oligopolistic Competition By Pinto, Luis Santos
  2. Bundles and Range Strategies: The Case of Telecom Operators By PERNET, Sophie
  3. Optimal Bundle of Multimedia Services in Emerging Mobile Markets By NAM, ChanGi; KIM, SeongCheol; CHO, DeockHee; LEE, HyeongJik
  4. Service Bundling and the Role of Access Charge in the Broadband Internet Service Market By SHIM, Sunghee; OH, Jungsuk

  1. By: Pinto, Luis Santos
    Abstract: This paper studies how reciprocity and inequity aversion influence the behavior of firms in imperfectly competitive markets. The paper shows that if reciprocal firms compete à la Cournot, then they are able to sustain “collusive” outcomes under a positive reciprocity equilibrium. By contrast, Stackelberg warfare outcomes may emerge under a negative reciprocity equilibrium. The results for inequity aversion are similar. Cournot competition between inequity averse firms can be harmful to consumers if it leads to equilibria where firms feel compassion toward each other. However, in equilibria where inequity averse firms are envious of each other consumers are better off than if firms were selfish. The paper also shows that only under very restrictive conditions does reciprocity or inequity aversion have an impact on Bertrand competition. Finally, the paper shows that non-selfish preferences have a greater impact on equilibrium outcomes in markets with a small number of firms.
    Date: 2007
    URL: http://d.repec.org/n?u=RePEc:unl:unlfep:wp506&r=ind
  2. By: PERNET, Sophie
    Abstract: Against a background of competition and the generalisation of IP that characterises the field of electronic communications, the concept of the "bundle" has resulted in the emergence of "triple play", and even "quadruple play." This paper offers an overview of the growth of this phenomenon by introducing a distinction between the basic components of multiplay strategies and the diverse range of functions that can be linked to these strategies.
    Keywords: Bundle; range strategy; triple play; quadruple play.
    JEL: O33 L86 L82 O14 L88 H41 K23 L90 L96
    Date: 2006–09
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:3550&r=ind
  3. By: NAM, ChanGi; KIM, SeongCheol; CHO, DeockHee; LEE, HyeongJik
    Abstract: Although various emerging technologies have been launched, they present limitations as far as offering full-scale ubiquitous services independently is concerned. In view of this fact, service providers are likely to provide bundled services among possible combinations of services. Indeed, making a timely decision regarding the value maximization of bundled service is directly related to service providers' future growth and success in the turbulent market environment. This paper aims to find the optimal service bundle among five emerging mobile services: T-DMB, S-DMB, WiBro, HSDPA, and Telematics. Considering what kinds of service features among the five emerging services offer differentiation to customers, we examine four attributes (TV, voice, portable wireless internet, and location-based services) using conjoint analysis to distinguish the service features. Our results show that TV service is the most favored among the attributes, followed by voice service in second position, and the internet and location-based service in third and fourth place respectively. Our result implies that mobile operators would be better off bundling HSDPA and S-DMB first, and then adding other services later, while fixed operators would be better off bundling WiBro and S-DMB first and other services later.
    Keywords: telecommunications and broadcasting convergence; emerging service; 4G Technology; T-DMB; S-DMB; WiBro; HSDPA; telematics; customer preference.
    JEL: H23 K21 L82 L96
    Date: 2006–09
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:3551&r=ind
  4. By: SHIM, Sunghee; OH, Jungsuk
    Abstract: Using the classical Hotelling model, this paper analyzes the incentive for a CATV service provider to bundle broadband internet services when entering the broadband internet services market. In addition, the effect of such service bundling by an entrant on the market incumbent with ownership over existing bottleneck facilities is analyzed. Furthermore, an access charge that maximizes social welfare is explored and determined. Two cases are considered: in the first case, the market is fully covered; and in the second case, the market is not fully covered. With full market coverage, an entrant has an incentive for service bundling if there is sufficient service differentiation. The entrant's bundling strategy reduces the incumbent's profit. In this case, the total social welfare is independent of the level of the access charge and only has an effect of redistributing the net surplus between consumers and the incumbent. With partial market coverage, the entrant has an incentive for service bundling at a low access charge. The incumbent's profit increases if the access charge is higher than the cost of access provisioning. In this case, the total social welfare is dependent on the level of access charge and the welfare maximizing access charge is less than the unit cost of providing access.
    Keywords: cable TV; broadband internet service; bundling; access charge; convergence.
    JEL: D45 L86 K21 L82 D42 K23 L96 L43
    Date: 2006–09
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:3553&r=ind

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