The analysis of market efficiency: a case of bundling telecom services

This study presents an economic model based on demand function to analyze the benefits of bundling on three telecommunication services (local, interstate, and intrastate calls) from the customers´ perspective. The cross elasticity of demand shows that the demands of these three services are significantly correlated. In other words, all three services are complements and bundling the services might increase the consumption of each other. The results suggest that customers can benefit from one-stop-shopping because bundling reduces the transaction cost to the customers in the market