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Bundling incentives in markets with product complementarities: The case of triple-play

Author

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  • Macieira, João
  • Pereira, Pedro
  • Vareda, João
Abstract
We analyze firms' incentives to bundle and tie in the telecommunications industry. As a first step, we develop a discrete-choice demand model where firms sell products that may combine several services in bundles, and consumers choose assortments of different types of products available from various vendors. Our approach extends standard discrete-choice demand models of differentiated product to allow for both flexible substitution patterns and to map demand for each choice alternative onto the demand for each service or bundle that a firm may sell. We exploit these properties to examine bundling behavior when firms choose: (i) prices, and (ii) which products to sell. Using consumer-level data and survey data from the Portuguese telecommunications industry, we estimate our demand model and identify firm incentives to bundle and tie in this industry. We use the model to perform several policy related conterfactuals and evaluate their impact on prices and product provision.

Suggested Citation

  • Macieira, João & Pereira, Pedro & Vareda, João, 2014. "Bundling incentives in markets with product complementarities: The case of triple-play," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106843, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itsb14:106843
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    References listed on IDEAS

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    Cited by:

    1. Reiko Murakami, 2022. "Consumer switching behavior and bundling: an empirical study of Japan’s retail energy markets," International Journal of Economic Policy Studies, Springer, vol. 16(2), pages 443-463, August.
    2. Kuroda, Toshifumi & Ida, Takanori & Koguchi, Teppei, 2015. "The impact of asymmetric regulation on product bundling: The case of fixed broadband and mobile communications in Japan," 2015 Regional ITS Conference, Los Angeles 2015 146318, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    Bundles; Discrete-Choice Model; Equilibrium Simulation; Differentiated Product; Consumer Level Data;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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