International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Strategic Bundling and Entry Decision in Telecommunications
Xiaoting Wang

Abstract
In this paper, we consider the issue of entry in telecommunications market. When there exist consumer switching costs, a potential entrant could offer a new product bundled with an existing product and successfully penetrate the incumbent's market. Unlike previous literature on bundling, this paper focuses on the entrant's tying behaviour instead of the incumbent's. Two types of entry (facility based entry and renting from the incumbent firm) are investigated. Conditions under which bundling dominates unbundled sales are identified. Strategic bundling by an entrant is found to be pro-competitive in telecommunications market.

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