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Delineating markets for bundles with consumer level data: The case of triple-play

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  • Pereira, Pedro
  • Ribeiro, Tiago
  • Vareda, João

Abstract

The question of whether bundles of telecommunication services are relevant product markets is addressed. As a first step, demand for bundles of services, as well as the associated services, is modeled as a discrete choice problem with a potentially large number of products. A unique invoice based consumer level data set from Portuguese telecommunications firms is collected. This choice based data set is combined with survey data to characterize the market shares of all potential combinations of services available. Several discrete choice models are estimated. A Cross-Nested logit model is the most parsimonious description of the substitution patterns between the large number of products available. The demand model used, coupled with the definition of choice alternatives proposed, generates flexible substitution patterns, which produce reasonable price elasticities of demand. The demand for triple-play products is elastic, with own-price elasticities for the larger firms ranging between 3.2 and 1.3, and a market own-price elasticity of 1.4. Some of the products analyzed are found to be complementary. Our results indicate that triple-play bundles are a relevant product market.

Suggested Citation

  • Pereira, Pedro & Ribeiro, Tiago & Vareda, João, 2013. "Delineating markets for bundles with consumer level data: The case of triple-play," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 760-773.
  • Handle: RePEc:eee:indorg:v:31:y:2013:i:6:p:760-773
    DOI: 10.1016/j.ijindorg.2013.05.004
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    Citations

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    Cited by:

    1. Halmenschlager, Christine & Mantovani, Andrea, 2017. "On the private and social desirability of mixed bundling in complementary markets with cost savings," Information Economics and Policy, Elsevier, vol. 39(C), pages 45-59.
    2. repec:eee:telpol:v:42:y:2018:i:2:p:154-171 is not listed on IDEAS
    3. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-mediated network effects versus strategic discounting: Evidence from German mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 751-759.
    4. Joao Macieira & Pedro Pereira & Joao Vareda, 2013. "Bundling Incentives in Markets with Product Complementarities: The Case of Triple-Play," Working Papers 13-15, NET Institute.
    5. Bertschek, Irene & Briglauer, Wolfgang & Hüschelrath, Kai & Krämer, Jan & Frübing, Stefan & Kesler, Reinhold & Saam, Marianne, 2016. "Metastudie zum Fachdialog Ordnungsrahmen für die Digitale Wirtschaft: Im Auftrag des Bundesministeriums für Wirtschaft und Energie (BMWi)," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 147040.
    6. repec:kap:revind:v:53:y:2018:i:2:d:10.1007_s11151-018-9619-y is not listed on IDEAS
    7. Stephanie Lee, 2017. "Does Bundling Decrease the Probability of Switching Telecommunications Service Providers?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(3), pages 303-322, May.
    8. repec:eee:indorg:v:63:y:2019:i:c:p:18-43 is not listed on IDEAS

    More about this item

    Keywords

    Bundles; Relevant market; Triple-play; Consumer level data;

    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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