Abstract
Mergers of firms producing complementary products have ambiguous effects on consumer welfare. The merged firm may lower prices to internalize the profits created by complementary products. The firm could also use bundles to exert price discrimination, increasing the prices of standalone products. As such mergers continue to make national headlines in Colombian telecommunications industries, I employ a comprehensive, administrative data set, which records prices, market shares, and plan attributes of the universe of Colombia's telecom carriers, to assess which effect dominates. I estimate a random-coefficient discrete choice of consumer demand model for bundled and standalone telecom products (Internet, cell phone, TV, phone and mobile phone), in which the degree of substitutability or complementarity among products is a key parameter of interest. I find that hardwired and mobile services are complements. My counterfactual experiments using the estimated model indicate positive net effects of mergers with complements: despite a small increase in the price of standalone goods, consumer surplus increases by around 7 million dollars per quarter.
Acerca del expositor
Sebastian es candidato a Ph.D. en Economía y Máster en Economía de la Universidad de Arizona; Máster en Economía Aplicada y Economista de la Universidad del Valle. Profesor asistente en la Universidad de Arizona y la Universidad del Valle. Sus áreas de interés son organización industrial, microeconomía y economía de la salud.