University of Cambridge > Talks.cam > Economics & Policy Seminars, CJBS > MARKET ENTRY, FIGHTING BRANDS AND TACIT COLLUSION: THE CASE OF THE FRENCH MOBILE TELECOM MARKET

MARKET ENTRY, FIGHTING BRANDS AND TACIT COLLUSION: THE CASE OF THE FRENCH MOBILE TELECOM MARKET

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If you have a question about this talk, please contact Emily Brown.

A light lunch will be served ahead of the seminar at 12:30 in the Conference Reception.

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 rationalised only as a breakdown of tacit collusion.

In the absence of entry the incumbents successfully colluded on restricting their product variety to avoid cannibalisation; 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.

This talk is part of the Economics & Policy Seminars, CJBS series.

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