One-phone service and mobile market foreclosure

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 other 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 will solve this undesirable issue of mobile market foreclosure.*Earlier versions were presented at the 2005 Korea Economic Association Annual Conference held at Seoul, Korea and 2005 ITS conference held at Perth, Australia.