The ABC of complementary products mergers

Anderson, Simon P.; Loertscher, Simon; Schneider, Yves

doi:10.1016/j.econlet.2009.11.022

Cited by 15 publications

(5 citation statements)

References 7 publications

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“…Besides, he examines how the mergers impact the incentives for R&D in the long run. A similar model is presented by Anderson et al (2010) in which it is shown under which circumstances the merger is profitable for the merging parties and under which conditions it may lead to competitive harm. Both models assume that there are no cost synergies and instead, the incentives for the merger arise from the internalization of profits.…”

Section: Relation To the Literaturementioning

confidence: 91%

Merger effects with product complementarity : evidence from Colombia’s telecommunications

Vélez-Velásquez¹

2017

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Mergers of firms producing complementary products have ambiguous effects on consumer welfare. Consumers benefit if the firm, motivated by the internalized profits created by the complementarity, lowers prices. Consumers are hurt if the firm uses bundles to exert price discrimination, making standalone products more expensive. To assess which effect dominates, I use an administrative dataset, which records prices, market shares, and plan attributes of the universe of Colombia's telecom carriers. I estimate a random coefficients discrete choice model of demand for bundled and standalone telecom products, in which the degree of substitutability or complementarity among products is an essential parameter of interest. I find that major telecom products display a mix of substitutability and complementarity, but in general hardwired and mobile services are complements. 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 increased by around 11 million dollars per quarter after the Claro merger. On the other hand I find evidence that mergers between ISPs and mobile carriers reduce the likelihood of poorer households adopting faster broadband.

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Section: Relation To the Literaturementioning

confidence: 91%

Merger effects with product complementarity : evidence from Colombia’s telecommunications

Vélez-Velásquez¹

2017

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“…Choi (2008), assuming that the merged firm engages in mixed bundling, builds on Economides and Salop (1992) to find cases where an exogenous merger, which is always privately profitable, is socially detrimental. We further delve into the idea developed by Anderson et al (2010), where a merger of complements is profitable under some conditions (depending on the shape of the demand function) in the presence of competition. 2 Our model complements and extends these contributions.…”

Section: Related Literaturementioning

confidence: 99%

Endogenous Mergers of Complements with Mixed Bundling

Flores-Fillol

Moner‐Colonques

2011

Rev Ind Organ

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“…In Fridolfsson and Stennek () the merger, although unprofitable, may increase the stock exchange value of the firm. In Anderson et al (), a merger of complements is profitable in a competitive scenario depending on the shape of the demand function.…”

Section: Literature Reviewmentioning

confidence: 99%

The Strategic Interplay Between Bundling and Merging in Complementary Markets

Mantovani

Vandekerckhove

2014

Manage. Decis. Econ.

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In this paper, the firms within two pairs of complementors decide whether to merge and eventually bundle their products. Depending on the competitive pressure in the market, either the firms within both pairs merge, with or without bundling, or only one pair merges and bundles, whereas the other one remains independent. The latter case can be harmful for consumers as overall prices surge. We also consider the case where a pair moves before the other. Interestingly, we find a parametric region where the first movers merge, but refrain from bundling, to not induce rivals to merge as well.

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The ABC of complementary products mergers

Cited by 15 publications

References 7 publications

Merger effects with product complementarity : evidence from Colombia’s telecommunications

Merger effects with product complementarity : evidence from Colombia’s telecommunications

Endogenous Mergers of Complements with Mixed Bundling

The Strategic Interplay Between Bundling and Merging in Complementary Markets

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