Essays in industrial organization

This thesis contains three main chapters, each providing analysis into topics in the area of industrial organization. Unawareness and Communication in Vertical Relationships I analyse communication in a setting where a distributor offers a contract to a produ- cer over the supply of a product. Both firms can exert effort, which may be observable or unobservable. The distributor is aware of a pay-off relevant contingency and can choose to communicate this to the unaware producer. The distributor may in com- municating face a trade-off between inducing optimal effort inputs and lowering the cost of ensuring participation. Communication occurs more often when effort is un- observable as the distributor is less able to benefit from his information. Joint surplus of the firms is higher when effort is unobservable than when effort is observable. Markets with Differentiated Add-on Products I analyse a duopoly market where firms supply differentiated core and add-on products. Some consumers are uninformed about preferences and prices of add-on products. I find that firms will price add-ons above marginal cost even with fully informed con- sumers and that add-on profits are not competed away in core market competition. The market outcome leads to inefficient matching between firms and consumers who purchase too few add-ons. The presence of uninformed consumers is harmful for in- formed consumers because of higher add-on prices. If consumers can decide whether to be informed or not, add-on prices rise with the fraction of informed consumers. Competition and Bundling: An Empirical Analysis of European Telecom Markets Using data on European telecom markets, I estimate a structural model of demand for mobile and broadband services. I use two data sources that provide choice information at different aggregation levels which the model is constructed to account for. The estimated model is used to conduct merger simulations. Issues focused on are the importance of pricing complementarities arising between firms' standalone product offers as well as the level of consumer demand for bundling. The simulations imply that merger outcomes can significantly depend on complementarity effects. I also find that higher demand for bundling leads to higher price increases from mergers, as firms become stronger substitutes.