Marc Bourreau

Institut Mines-Télécom | telecom-sudparis.eu · Département Sciences Economiques et Sociales

In 2007 a prominent British alternative-rock band, Radiohead, pre-released its album In Rainbows online, and asked their fans to "pick-their-own-price" (PYOP) for the digital download. The offer was available for three months, after which the band released and commercialized the album, both digitally and in CD. In this paper, we use weekly music sa...

In this paper, we analyze the incentives of an incumbent and an entrant to migrate from an “old” technology to a “new” technology, and discuss how the terms of wholesale access affect this migration. We show that the coverage of the new technology varies non-monotonically with the access price of the old technology: a higher access charge on the le...

We propose a model of two‐tier competition between vertically integrated firms and unintegrated downstream firms. We show that, even when integrated firms compete in prices to offer a homogeneous input, the Bertrand logic may collapse, and the input may be priced above marginal cost in equilibrium. These partial foreclosure equilibria are more like...

In this paper, we first provide a simple framework for cooperation in product development between competitors. We put forward the tradeoff between the benefits obtained through development cost sharing and the cost of intensified competition due to reduced product differentiation, which implies that no cooperation can be an equilibrium outcome. We...

We develop a model of strategic geoblocking, where two competing multi-channel retailers, located in different countries, can decide to block access to their online store from foreign consumers. We characterize the equilibrium when firms decide unilaterally whether to introduce geoblocking restrictions. We show that geoblocking allows firms to soft...

We study a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbents. Using an empirical oligopoly model, we find that the incumbents’ fighting brand strategies are difficult to rationalize as unilateral best responses. Instead, their strategies are consistent with a brea...

It is crucial for content providers (CPs) to appear prominently on dominant online platforms in order to attract consumer demand. Apart from organic search results, content providers can obtain such prominence also in return for a monetary payment to the platform, e.g., in the form of sponsored search results. In this article, we investigate some o...

The literature is rather inconclusive when it comes to asserting whether digital technologies tend to favor collaboration (Do-It-Together, DIT) or creating alone (Do-It-Yourself, DIY) in creative production. In this paper, we argue that providing an answer to that question implies adopting a micro-perspective, which ties individual creators’ usage...

We consider a platform that carries content from two upstream content providers and presents personalized recommendations to participating customers. We focus on streaming platforms in media markets, where users pay a subscription fee to join the platform but no usage fee, and consume a mix of content originating from each provider. We characterize...

Attitude Toward Risk and Movies Digital Piracy This paper aims at investigating whether the individual attitude towards risk is a predicator of the movie piracy behavior. This issue is of interest as public policy against digital piracy, such as the Graduated Response of the Hadopi law in France, aims at making piracy risky. In this paper, the atti...

Using weekly music charts data in ten countries over the period 1990 to 2015, we analyze whether digitization led to a trend of homogenization of music content or conversely to a greater acoustic disparity within music charts. Acoustic diversity measures the variance of a set of songs calculated across the following acoustic attributes: danceabilit...

Caused largely by the recent technological changes towards digitalization, infrastructure investment in network industries has become the main issue for regulatory intervention. In this paper, we study the impact of co-investment between an incumbent and an entrant on the roll-out of network infrastructures under demand uncertainty. We show that if...

We develop a model of strategic geoblocking, where two competing multi-channel retailers, located in different countries, can decide to block access to their online store from foreign consumers. We characterize the equilibrium when firms decide unilaterally whether to introduce geoblocking restrictions. We show that geoblocking results in a “puppy...

In this paper, we document how public funds, or State Aid, have been used to support the deployment of broadband infrastructure in Europe since 2003. Our descriptive analysis relies on a unique data set on all the broadband measures notified to the European Commission by Member States between 2003 and 2018. We identify two waves of State Aid for br...

While streaming services are becoming the dominant way to consume recorded music, professional musicians remain divided in their opinion toward streaming, especially toward free (ad-supported) services that generate very low royalties. This paper is one of the first attempts to analyze empirically the drivers of the artists’ opinion on free streami...

Regulated access schemes shape incentives for both investment and entry in next-generation networks. We study in a general duopoly setting whether and how risk premia, access options or long-term contracts improve those incentives as compared to standard access pricing. The first two do so: Risk premia guarantee highest coverage, while distorting r...

In this paper, we study the impact of competition on the legacy copper network on the deployment of high-speed broadband. We first develop a theoretical model, which shows that the relation between the number of competitors and investment in a quality-improving technology can be positive if the quality of the new technology is high enough, and is n...

In this paper we analyze the interplay between access to the last-mile network and net neutrality in the market for Internet access. We consider two competing Internet service providers (ISPs), which act as platforms between Internet users and content providers (CPs). One of the ISPs is vertically integrated and provides the other (non-integrated)...

We analyze the impact of interchange fees on consumers’ and merchants’ incentives to adopt an innovative payment instrument, in a setting with adoption externalities between consumers and merchants. We show that consumer adoption decreases with the interchange fee for high degrees of externality, and varies non-monotonically with it for low degrees...

Près de vingt années se sont écoulées depuis l’apparition de Napster, souvent considérée comme le point de départ de la transformation numérique de l’industrie musicale. Comment les musiciens se sont-ils adaptés à cette transformation ? C’est la question à laquelle cet ouvrage entend répondre en analysant les résultats d’une enquête menée auprès de...

In this paper we propose a model where consumer personal data have multidimensional characteristics, and are used by platforms to offer ad slots with better targeting possibilities to a market of differentiated advertisers through real-time auctions. A platform controls the amount of information about consumers that it discloses to advertisers, the...

In this paper, we focus on recorded music gifts during the holiday season and estimate the reduction in deadweight loss due to the transition from physical CD gift-giving to digital music gift-giving with gift cards. Based on our survey data, we find that music CD gifts generate an average deadweight loss between 15% and 38% of the price. According...

In this paper, we focus on recorded music gifts during the holiday season and estimate the reduction in deadweight loss due to the transition from physical CD gift-giving to digital music gift-giving with gift cards. Based on our survey data, we find that music CD gifts generate an average deadweight loss between 15% and 38% of the price. According...

In this paper, we study the impact of a merger to monopoly on prices and investments. Two single-product firms compete in prices and coverage for a new technology. In equilibrium, one firm covers a larger territory than its competitor with the new technology, leading to single-product and multi-product zones, and sets a higher uniform price. If the...

The paper reviews the different legal tools to regulate the personalised pricing and provide some policy recommendations in that regard. Section 1 provides a definition of the personalsied prices and analyses to which extend firms are currently personalising their practices. Section 2 deals with the impacts of personalised pricing on firms’ profits...

This paper compares the impacts of traditional one-way access obligations and the new regulatory scheme of co-investment on the roll-out of network infrastructures. We show that compulsory access leads to smaller roll-out, first because it reduces the returns from investment, and second because in the presence of uncertainty it provides access seek...

This paper investigates the impact on fiscal revenues of taxing a two-sided monopolistic platform offering personalized services to users and targeted advertising to sellers, based on the collection of users' personal data. We show that the introduction of a small tax on data collection, which has been proposed in the French context by Collin and C...

This paper studies three specific issues around the application of competition policy to big data. The first issue relates to market power assessment and analyses the power given by data control in the big data value chain. The second and third issues relate to abuse of dominance assessment and analyse the use of data to personalise prices and to t...

In this article, we study the impact of the development of e-commerce on the concentration of the recorded music industry in France, for the period 2003–2010. First, we find that over the whole period, CD sales, measured at the distributor level, are less concentrated online than offline. Second, we find that sales concentration online has increase...

In this paper, we consider Research Joint Ventures (RJVs) that are set up to develop product components. We propose an n-firm oligopoly model to study the effect of the degree of cooperation in product development (i.e., the number of jointly developed product components) on the size of the RJV (i.e., the number of RJV participants). We assume that...

In line with the ladder of investment approach and in contrast with the previous literature, we show that in the telecommunications sector, service-based entry can in some cases accelerate the development of facility-based competition. We extend the model introduced by Bourreau, Dogan and Lestage [2014], in which a regulator sets not only the acces...

An Economic Analysis of the Long Tail Phenomenon in Cultural Markets Since the 1990s, digital technologies have transformed the value chain in cultural industries by introducing new ways of creating, distributing and promoting information goods. The concept of the Long Tail (Anderson [2004]) states that the development of Internet and e-commerce sh...

This paper analyses the impact of substitution between fixed and mobile telephony on call prices. We develop a model where consumers differ in the benefits of mobility and firms price discriminate between on-net and off-net calls. We find that call prices are distorted downwards due to substitution possibilities and customer heterogeneity, and that...

We analyze the adoption of access regimes that differ according to the prevailing degree of infrastructure competition in different geographical areas of a country. Our results show that, compared to a uniform access price, geographically differentiated access prices improve welfare and incentivize investment. However, when access provision in area...

In this paper we propose a model which shows that the impact of copyright infringement on music artists depends on the type of revenue that they receive (royalties from record companies, profits for self-released artists, revenues from live concerts). We then test the hypotheses derived from the model on a dataset consisting of a survey of 710 arti...

This paper studies the effect of termination rates on the observed substitution between fixed and mobile calls and access, in a model where consumers can subscribe to one or both types of offers. Simulations show that each (fixed or mobile) termination rate has a positive effect on the take-up of the corresponding service, via the waterbed effect,...

A new type of contractual arrangement in the music industry – the so-called “360-degree” or “equity” deal – allows a firm (e.g., a record label) to manage all of an artist’s activities, such as sales of recorded music, touring, merchandising, etc. Since these contracts internalize the positive externalities that exist between the recorded music mar...

In this paper, we study how the terms of access to an incumbent’s infrastructure (i.e., the level of access and price) affect an entrant’s incentives to build its own infrastructure. Setting a high level of access (e.g., a resale arrangement), which requires relatively small up-front investment for entry, accelerates market entry, but at the same t...

We study how the migration from an old to a new technology is affected by the access price to the old technology. We show that both the incumbent and the regulator are willing to set a very high access price to accelerate consumers’ migration to the new technology. When the quality of the old technology is exogenous and the entrant dominates invest...

In this paper we study the impact of different forms of access obligations on firms’ incentives to migrate from the legacy copper network to next generation broadband infrastructures. We analyze geographically differential access prices of copper (that depend on whether or not an alternative fiber network has been deployed in the area) and ex-ante...

In this paper, we analyze the impact of cooperation on R&D investments in a two-sided market, where platforms compete in quantities. We show that if indirect externalities are of a moderate magnitude, the threshold degree of spillovers above which cooperation spurs R&D investments and enhances social welfare increases with the degree of externaliti...

The impact of piracy on physical purchases and pay-downloads: a comparison of four cultural industries Using a survey on cultural habits and consumption behavior of 2,000 individuals, we study the determinants of physical purchases and pay-downloads in four cultural industries: books, recorded music, movies, and video games. We show that the impact...

This paper studies the effect of termination rates on substitution between fixed and mobile calls and access, in a model where heterogeneous consumers can subscribe to one or both types of offers. Simulations show that each (fixed or mobile) termination rate has a positive effect on the take-up of the corresponding service, via the waterbed effect,...

Using a survey on cultural habits and consumption behavior of 2,000 individuals, we study the determinants of physical purchases and pay-downloads in four cultural industries: books, recorded music, movies, and video games. We show that the impact of piracy on legal purchases differs among these industries: it is negative for recorded music, but po...

The term "technology neutrality" (or "technological neutrality") is a principle of good regulation in Internet, telecoms and data protection regulation. Yet the term has several distinct meanings: • Meaning 1: technology neutrality means that technical standards designed to limit negative externalities (eg. radio interference, pollution, safety) s...

We analyze the impact of interchange fees on consumers' and merchants' incentives to adopt an innovative payment instrument. In our setting, two issuing banks compete to attract consumers and merchants, when consumers' adoption incentives depend on the number of adopters on the merchant side, and vice versa. We show that the relationship between co...

Often, fixed-line incumbents also own the largest mobile network. We consider the effect of this joint ownership on market outcomes. Our model predicts that while fixed-to-mobile call prices to the integrated mobile network are more efficient than under separation, those to rival mobile networks are distorted upwards, amplifying any incumbency adva...

We investigate cooperative investment in a new infrastructure and how it interacts with access obligations and demand uncertainty. Co-investment only increases total coverage if service differentiation and/or cost savings from joint investment, in particular due to high uncertainty, are high. Mandated access reduces incentives for co-investment not...

A partir d’une enquête sur les pratiques culturelles et les comportements d’achat de plus de 2 000 individus, nous étudions les déterminants de l’achat et du téléchargement de biens culturels pour les quatre filières du livre, de la musique, du film et du jeu vidéo. Nous trouvons que la relation entre le piratage et les achats légaux est différente...

In 2007 a prominent British alternative-rock band, Radiohead, pre-released its album In Rainbows online, and asked their fans to “pick-their-own-price” (PYOP) for the digital download. The offer was available during an 8-week window, soon after which the digital and CD albums were commercialized at pre-set prices. In this paper, we use weekly music...

In this paper, we study how the terms of access to an incumbent’s infrastructure (i.e., the level of access and price) affect an entrant’s incentives to build its own infrastructure. Setting a high level of access (e.g., a resale arrangement), which requires relatively small up-front investment for entry, accelerates market entry, but at the same t...

In this paper we study how the migration from an old to a new technology is affected by the access price to the old technology, when it is set after investments have taken place. We show that both the incumbent and the regulator are willing to set a very high access price to accelerate consumers’ migration to the new technology. When the quality of...

From visibility to attention: musicians on the internet The long tail theory (Anderson, 2006) argues that the development of decentralized promotion on the Internet is likely to change the distribution of revenue in the music industry, to benefit relatively unknown artists. However one of the necessary conditions for the long tail to become operati...

In this paper we propose a model of competition between a private television channel, financed by advertising, and a public channel, financed by advertising and a transfer of public funds. We study the impact that an advertising quota imposed on the public channel has on the channels and on the viewers' welfare. We show that, in the short term, whe...

Two-sided markets in the video game industry The video game industry has the features of a two-sided market: video game platforms rival one another to appeal to both players and games publishers. For a player (respectively, publisher), a platform is especially interesting when it hosts a large number of publishers (respectively, players). Based on...

In this paper we study the impact of a radical technological innovation on business models. Do firms react by adjusting their business models incrementally, through iterative steps? Or do such innovations lead, instead, to a big bang of new innovative business models that are all adopted and experimented with by the industry? To answer these questi...

We analyze competition between vertically integrated infrastructure operators that provide access in different geographical areas. A regulator may impose a uniform access price, set local access rates, or deregulate access locally. We analyze the impact of these alternative regulatory regimes on network investments. While cost-based access leads to...

In this paper we use data from a survey of 151 French record companies to test the “long tail theory” at the level of the firm. More specifically, we test whether, following the “selling less of more” principle coined by Anderson (2006), record companies that have adapted to digitization (at various levels: artists’ scouting, distribution and promo...

Investments in Next Generation Access Networks (NGANs) ask for a new set of regulatory remedies. This paper contributes to this debate by focusing on three issues: the migration from the legacy copper network to the NGA infrastructure, and how wholesale pricing regulation might affect this process; the introduction of differentiated wholesale remed...

In the telecommunications industry, the ladder of investment approach claims that service-based competition (when entrants lease access to incumbents' facilities) can serve as a "stepping stone" for facility-based entry (when entrants build their own infrastructures to provide services). In this paper, we build an empirical model considering a comp...

L’industrie musicale est en crise alors que dans le même temps la consommation de musique ne s’est jamais aussi bien portée. Ces difficultés ont conduit à des politiques publiques défensives, concentrées sur la protection de la filière musicale contre le piratage. Pourtant l’impact du numérique est bien plus large. Les opportunités qu’il offre devr...

We propose a two-sided model with two competing Internet platforms, and a continuum of heterogeneous Content Providers (CPs). We study the effect of a net neutrality regulation on capacity investments in the market for Internet access, and innovation in the market for content. Under the alternative discriminatory regime, platforms charge a priority...

La théorie de la longue traîne (Anderson, 2006) prédit que le développement de la promotion décentralisée sur Internet est susceptible, dans l’industrie de la musique, de modifier la distribution des ventes au bénéfice des artistes de moyenne et faible notoriété. Toutefois, une condition nécessaire est que les outils de promotion décentralisée soie...

In this paper we study the impact of a radical technological innovation on business models. Do firms react by adjusting their business models incrementally, through iterative steps? Or do such innovations lead, instead, to a big bang of new innovative business models that are all adopted and experimented with by the industry? To answer these questi...

The impact of the ban of advertising on public television In this paper, we propose a model of competition between a private television channel, financed by advertising, and a public channel, financed by advertising and a transfer of public funds. In this framework, we study the impact of an advertising quota imposed on the public channel on the tw...

In this paper, we analyze the incentives of an incumbent and an entrant to migrate from an "old" technology to a "new" technology, and discuss how the terms of wholesale access affect this migration. We show that a higher access charge on the legacy network pushes the entrant firm to invest more, but has an ambiguous effect on the incumbent's inves...