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- Title
Testing for complementarities among countable strategies.
- Authors
Miravete, Eugenio
- Abstract
I study whether the pricing strategies of competing duopolists in the early US cellular telephone industry can be considered strategic complements or substitutes. In order to do so, I present a multivariate count data regression model that is suitable to test for the existence of strategic complementarities when firms make use of countable strategies. The estimator, which accommodates the underdispersion that characterizes the data, is shown to have better small-sample properties than common estimators based on the Gaussian copula. It also allows for correlations of any sign among counts independently of the dispersion parameters. Results show that in addition to screening consumers, competing firms imitated each other in the number of tariff options offered to their customers.
- Subjects
COMPLEMENTARITY constraints (Mathematics); CELL phone equipment industry; MULTIVARIATE analysis; CONSUMERS; TARIFF; REGRESSION analysis
- Publication
Empirical Economics, 2014, Vol 46, Issue 4, p1521
- ISSN
0377-7332
- Publication type
Article
- DOI
10.1007/s00181-013-0729-y