'Mobile Only' Users Powered by Fixed-Mobile Substitution

In a context of partial fixed-mobile substitution, we analyze fixed-mobile bundling and mobile-to-fixed off-loading in a duopoly model in which consumers buy one or two products. A joint purchase discount mitigates fixed-mobile substitutability and consequently reduces mobile-only and fixed-only consumers. Practises like introducing a small discount, applied on a bundle of multiple service or mobile-to-fixed offloading by both operators are analysed. We find that such practises do not have negative impacts on the profits of whole market and lead to both consumers' surplus and welfare gains. The investment incentives in fixed network are positive and can be boosted by FM bundling without considering regulatory intervention and before taking into account of fixed costs. The investment incentives in mobile network are more likely a situation of prisoners' dilemma where operators should invest as long as there are mobile-only consumers

A Permit Allocation Contest for a Tradable Pollution Permit Market

In this paper we advocate a new initial allocation mechanism for a tradable pollution permit market. We outline a Permit Allocation Contest (PAC) that distributes permits to firms based on their rank relative to other firms. This ranking is achieved by ordering firms based on an observable 'external action' where the external action is an activity or characteristic of the firm that is independent of their choice of emissions in the tradeable permit market. We show that this mechanism efficiently allocates permits and, as a result, the tradeable permit market is cost-effective. We determine the symmetric equilibrium strategy of each firm in choosing their external action and find the choice is influenced by the firm's cost structure and the regulator's choice of permit allocation schedule (distribution of permits to the market). Furthermore, we investigate the factors that determine the regulator's choice of optimal permit allocation schedules