The Rise of Confusopoly: Evidence from the UK mobile market, joint with Christos Genakos and Tobias Kretschmer. Working Paper.
In this paper, we shed light on how firms strategically behave in a competitive setting in terms of portfolio size, product variety, and prices. We use a detailed dataset of all mobile tariffs offered in the United Kingdom between January 2010 to September 2012. Using various regressions, we highlight that, contrary to the theoretical prediction, prices and variety do not always evolve in the same direction. We suggest possible explanations for this observation. In particular, we argue that firms used obfuscation strategies to create confusion and make it difficult for consumers to compare tariffs. We show that the leverage used was the combinations of tariffs with handsets.