Complementarity without Superadditivity / Steven Berry, Philip Haile, Mark Israel, Michael Katz.

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Berry, Steven

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w22811.Publication details: Cambridge, Mass. National Bureau of Economic Research 2016.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: The distinction between complements, substitutes, and independent goods is important in many contexts. It is well known that when consumers' conditional indirect utilities for two goods are superadditive, the goods are gross complements. Generalizing insights in Gans and King (2006) and Gentzkow (2007), we show that superadditivity between one pair of goods can also introduce complementarity between competing pairs of goods. One implication is that lower prices can result from a merger between producers of goods that themselves offer no superadditivity.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w22811 (Browse shelf(Opens below))	Not For Loan

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November 2016.

The distinction between complements, substitutes, and independent goods is important in many contexts. It is well known that when consumers' conditional indirect utilities for two goods are superadditive, the goods are gross complements. Generalizing insights in Gans and King (2006) and Gentzkow (2007), we show that superadditivity between one pair of goods can also introduce complementarity between competing pairs of goods. One implication is that lower prices can result from a merger between producers of goods that themselves offer no superadditivity.