One-phone service and mobile market foreclosure

Abstract

This paper constructs a simple, mixed bundling model of one-phone service to explore its social effects. The study demonstrates that the fixed line monopolist has an incentive to foreclose the competitive mobile market through the provision of one-phone service. In words, efficient mobile firms will be driven out of the market. This finding, however, contrasts with the existing findings of the Chicago School and arises from the routing and converging effect of the one-phone service. We suggest that equal treatment of competitors solve this undesirable issue of mobile market foreclosure. © Springer Science+Business Media, Inc. 2006.