Analyzing the Motivations of a Joint Venture to Provide High-Quality Music Download Service to Mobile Phones

Posted by D. Daniel Sokol

Koki Arai (Competition Policy Research Center) is Analyzing the Motivations of a Analyzing the Motivations of a Joint Venture to Provide High-Quality Music Download Service to Mobile Phones

ABSTRACT: This article explores the motivations of a joint venture to provide a high-quality music download service for mobile phones that resulted from a case of a concerted refusal to trade; this refusal was a violation of Antimonopoly Law. We analyze five years of monthly compact disk (CD) singles sales in order to identify the incentive for the concerted refusal to trade. The results show that when a CD single is ranked within the top three according to national sales charts, the effect of this factor is significantly greater than can be attributed to any simple ranking proportional effect, which is a prediction of the rank based on the number of sales in the week. Furthermore, we find that the complementary relationship among major companies as expressed by a joint venture could offer benefits. Commitment to a joint venture for the purpose of conveying one’s recognition of the venture and potentially beneficial intentions are a key determinant for joint venture formation.