Benchmarking rules and pricing in network oligopolies

In network industries with complementary or sequential consumption, decentralised pricing can generate inefficient cross-firm markups on bundled consumption. Motivated by regulatory provisions for coordinated pricing that have received little formal analysis, we study benchmarking rules that tie cross-firm prices to standalone or bundled products. Benchmark design fundamentally shapes equilibrium outcomes by altering strategic interaction and markup propagation across firms. Coordination is not inherently welfare-improving: discount-based benchmarks actually generate equilibrium surcharges. By contrast, a bundled no-discount rule induces strategic complementarity, insulates markups within firms, and improves welfare. The welfare advantage persists even when firms endogenously choose network size. The resulting benchmark is selfanchoring and operationally implementable using observable prices. However, private and social incentives can diverge, so welfare-improving coordination may not arise endogenously. The analysis extends beyond small networks to general n-firm settings. A transport calibration indicates substantial consumer-surplus gains (around 20%), alongside external benefits comparable in magnitude to existing operating subsidies.