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

João Macieira, Pedro Pereira and João Vareda

20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies from International Telecommunications Society (ITS)

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.

Keywords: Bundles; Discrete-Choice Model; Equilibrium Simulation; Differentiated Product; Consumer Level Data (search for similar items in EconPapers)
JEL-codes: D43 K21 L44 L96 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com, nep-dcm, nep-ind, nep-law, nep-mkt and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Bundling Incentives in Markets with Product Complementarities: The Case of Triple-Play (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:itsb14:106843

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