TY - JOUR AU - Bajari,Patrick AU - Fox,Jeremy T. AU - Ryan,Stephen TI - Evaluating Wireless Carrier Consolidation Using Semiparametric Demand Estimation JF - National Bureau of Economic Research Working Paper Series VL - No. 12425 PY - 2006 Y2 - August 2006 UR - http://www.nber.org/papers/w12425 L1 - http://www.nber.org/papers/w12425.pdf N1 - Author contact info: Patrick Bajari Professor of Economics University of Minnesota 4-101 Hanson Hall 1925 4th Street South Minneapolis, MN 55455 Tel: 612/625-8369 Fax: 612/624-0209 E-Mail: bajari@econ.umn.edu Jeremy Fox Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-4862 Fax: 773/702-8490 E-Mail: fox@uchicago.edu Stephen P. Ryan MIT Department of Economics E52-262C 50 Memorial Drive Cambridge, MA 02142 Tel: 617/253-6082 Fax: 617/253-1330 E-Mail: sryan@mit.edu M2 - featured in NBER digest on 2006-08-14 AB - The US mobile phone service industry has dramatically consolidated over the last two decades. One justification for consolidation is that merged firms can provide consumers with larger coverage areas at lower costs. We estimate the willingness to pay for national coverage to evaluate this motivation for past consolidation. As market level quantity data is not publicly available, we devise an econometric procedure that allows us to estimate the willingness to pay using market share ranks collected from a popular online retailer, Amazon. Our semiparametric maximum score estimator controls for consumers%u2019 heterogeneous preferences for carriers, handsets and minutes of calling time. We find that national coverage is strongly valued by consumers, providing an efficiency justification for across-market mergers. The methods we propose can estimate demand for other products using data from Amazon or other online retailers where quantities are not observed, but product ranks are observed. Since Amazon data can easily be gathered by researchers, these methods may be useful for the analysis of other product markets where high quality data are not publicly available. ER -