Multiproduct Nonlinear Pricing: Mobile Voi ce Service and SMS (with Yao Luo and Quang Vuong)
Abstract:
This paper studies multiproduct nonlin ear pricing in the cellular phone industry with voice and message services. The model derives from Arsmtong (1996) in which the unknown types of consu mers are aggregated while the firm designs an optimal cost-based tariff. As usual in multidimensional screening problems, there is pooling at equilibr ium. Moreover, given that the consumers add a large number of unobserved ex tra features, we introduce two terms of unobserved heterogeneity for voice and message add-ons. The model defines two one-to-one mappings between the unknown aggregate type to the cost and the cost to the payment. We then stu dy the identification of the model primitives. Under some identifying assum ptions such as a parameterization of the cost function, we show that the pr imitives of the model (the aggregate type density, the indirect utility and the joint density of unobserved heterogeneity) are identified from observa bles. The empirical results support the model and display an important hete rogeneity in types and unobserved heterogeneity. The cost of asymmetric inf ormation for the firm is assessed. Counterfactuals measure the benefits of a customized tariff relative to a standard tarification with a limited numb er of plans that include a large number of features.
DTSTAMP:20260406T074907Z DTSTART:20171130T170000Z DTEND:20171130T183000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR