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Competition, Product Proliferation, and Welfare: A Study of the US Smartphone Market

  • Ying Fan
  • Chenyu Yang
American Economic Journal: Microeconomics
vol. 12, no. 2, May 2020
(pp. 99-134)
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Abstract

This paper studies (1) whether, from a welfare point of view, oligopolistic competition leads to too few or too many products in a market, and (2) how a change in competition affects the number and the composition of product offerings. We address these two questions in the context of the US smartphone market. Our findings show that this market contains too few products and that a reduction in competition decreases both the number and variety of products. These results suggest that product choice adjustment may exacerbate the welfare effect of a merger.

Citation

Fan, Ying, and Chenyu Yang. 2020. "Competition, Product Proliferation, and Welfare: A Study of the US Smartphone Market." American Economic Journal: Microeconomics, 12 (2): 99-134. DOI: 10.1257/mic.20180182

Additional Materials

JEL Classification

  • D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
  • G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
  • K21 Antitrust Law
  • L13 Oligopoly and Other Imperfect Markets
  • L41 Monopolization; Horizontal Anticompetitive Practices
  • L63 Microelectronics; Computers; Communications Equipment
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