6533b859fe1ef96bd12b77fe
RESEARCH PRODUCT
More firms, more competition? The case of the fourth operator in France's mobile phone market
Louis De Mesnardsubject
Economics and EconometricsJEL: L - Industrial Organization/L.L1 - Market Structure Firm Strategy and Market Performance/L.L1.L13 - Oligopoly and Other Imperfect MarketsNew operatorEntryCartelManagement Science and Operations ResearchCournot competitionIndustrial and Manufacturing EngineeringProfit (economics)Competition (economics)nouvel operateurMonopolistic competitionMarket economyJEL : L - Industrial Organization/L.L1 - Market Structure Firm Strategy and Market Performance/L.L1.L13 - Oligopoly and Other Imperfect MarketsPhone[ SHS.ECO ] Humanities and Social Sciences/Economies and finances[SHS.ECO] Humanities and Social Sciences/Economics and FinanceGSMStylized factJEL : D - Microeconomics/D.D4 - Market Structure Pricing and Design/D.D4.D43 - Oligopoly and Other Forms of Market ImperfectionCartelCartel.Economic surplus[SHS.ECO]Humanities and Social Sciences/Economics and FinanceGeneral Business Management and AccountingTéléphone mobileJEL: D - Microeconomics/D.D4 - Market Structure Pricing and Design/D.D4.D43 - Oligopoly and Other Forms of Market ImperfectionJEL : L - Industrial Organization/L.L9 - Industry Studies: Transportation and Utilities/L.L9.L96 - TelecommunicationsJEL: L - Industrial Organization/L.L9 - Industry Studies: Transportation and Utilities/L.L9.L96 - TelecommunicationsJEL : L - Industrial Organization/L.L4 - Antitrust Issues and Policies/L.L4.L41 - Monopolization • Horizontal Anticompetitive Practices3GentréeBusinessJEL: L - Industrial Organization/L.L4 - Antitrust Issues and Policies/L.L4.L41 - Monopolization • Horizontal Anticompetitive PracticesMobile phonedescription
Accepted, Forthcoming; International audience; To foster competition the French government authorized a fourth operator, ‘Free', to enter the country's mobile phone market at the end of 2009 alongside Orange, SFR and Bouygues Telecom (BT), who held respectively one-half, one-third and one-sixth of the market. By using a stylized model of France's phone market, we have examined what we call the regulator's nightmares and dreams. If Cournot competition is in place before Free's entry, minimizing the total profit fails to maximize the consumer surplus and the total surplus; the maximum most realistic price fall is 6.7% compared to three-way competition and could be 1.7% only; if Orange, SFR and Bouygues Telecom extend competition to Free, this situation will be sustainable. If Orange, SFR and Bouygues Telecom are in monopolistic cartel, an extension to a monopolistic cartel of four or a switching to four-way Cournot competition are equally unlikely; Orange, SFR and Bouygues Telecom can only place Free in their competitive fringe, which is not so bad for the regulator; however, Orange's incentives will push to four-way competition if Free is poorly competitive.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2010-12-13 |