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Better the devil you know: evidence from the UK mobile market

Genakos, Christos, Kretschmer, Tobias and Nicolle, Ambre (2021) Better the devil you know: evidence from the UK mobile market. CEP Discussion Papers (1810). Centre for Economic Performance, LSE, London, UK.

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Abstract

Do firms strategically confuse their customers? Using a detailed dataset covering virtually all mobile phone tariffs and their handsets in the UK between January 2010 and September 2012, we examine the co-evolution of prices with the differentiation and overlap of operators' product portfolios. Incorporating the fact that mobile tariffs are multidimensional and hard to compare but easy to imitate and cheap to launch, we argue that firms introduced a large number of dominated tariffs as an obfuscation strategy. We show that the increase in dominated tariffs correlates with the increase in average prices despite converging product portfolios. This exploratory study is one of the first to offer suggestive evidence of the existence and role of obfuscation as a firm strategy.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2021 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
JEL classification: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L96 - Telecommunications
Date Deposited: 25 Feb 2022 14:30
Last Modified: 08 Jul 2022 09:12
URI: http://eprints.lse.ac.uk/id/eprint/113835

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