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Discriminatory Dealing with Downstream Competitors: Evidence from the Cellular Industry
Author(s) -
Reiffen David,
Schumann Laurence,
Ward Michael R.
Publication year - 2000
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00123
Subject(s) - competitor analysis , downstream (manufacturing) , quality (philosophy) , industrial organization , business , production (economics) , vertical integration , phone , price discrimination , monetary economics , economics , commerce , microeconomics , marketing , epistemology , philosophy , linguistics
One concern about regulated monopolies entering unregulated vertically‐related markets is that they will discriminate against competitors of their unregulated affiliates. However, prohibiting regulated monopolies from offering related goods may preclude production by the most efficient provider. We take advantage of variation across geographic cellular phone markets in the US to examine the effect of integration on output, quality and prices. We find some evidence consistent with efficiencies (greater concentration of lines to users is associated with greater output and higher quality) and some consistent with discrimination (greater interconnection facility ownership concentration is associated with lower output and quality).