Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the Mobile Telephone Industry

Abstract

The deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in hopes of increasing competition. One example is the licensing of cellular telephone services in the United States where the FCC created duopolies in which two firms were granted licenses to compete in strictly defined product and geographic markets. Taking advantage of the unique regulatory environment, we test to what degree duopolistic competition leads to competitive market outcomes. We find that cross-ownership and multimarket contact are important factors in explaining non-competitive prices