Two-tier competition: Putting an end to oligarchies

Based on an interview with Johan Hombert, professor of finance at HEC Paris, research@HEC no 26, April-May 2012.

How do you achieve competitive markets when firms that sell an end product control the means of production (as is the case with the heavyweights of mobile telephony in France)? For Johan Hombert and his co-authors, the solution cannot be reduced to simply forcing integrated firms to provide the means of production to other isolated firms.

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Johan Hombert and his co-authors look at competition in markets where firms are vertically integrated; that is, they control both the production input — the mobile network they own in the case of mobile telephony — and the final product — the mobile plans offered to consumers. “We had the telecom industry in mind when we began this work around 2007, when high-speed Internet was developing in France, because many questions about regulation and competition policy were being asked: How do you develop telecoms and ensure that prices are not too high for the end-user?” says Hombert [read more]

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Two-tier competition: Putting an end to oligarchies
Published in research@HEC, no 26, April-May, a journal that has been promoting the research of HEC Paris professors since 2007.
Based on an interview with Johan Hombert, professor of finance, and the article “Upsteam competition with vertically integrated firms” (Journal of Industrial Economics, vol. 59, no. 4, December 2011, pp. 677-713), co-written with Marc Bourreau, Jérôme Pouyet, and Nicolas Schutz.