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Strategic interactions in mobile network investment with a new entrant and unobserved heterogeneity

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  • Marcoux, Mathieu

Abstract

I estimate a game of mobile network investment between national incumbents and a new entrant to shed light on the limited success of competition enhancing policies in Canada. I recover player-specific unobserved heterogeneity from bids for spectrum licences to address the unavailability of regressors required to identify incumbents’ responses to the new entrant’s decisions. I find that incumbents benefitting from important economies of density is a plausible explanation for policies’ limitations. I then evaluate the equilibrium effect of subsidizing the new entrant’s transceivers and find that this counterfactual policy increases its investment while only slightly modifying incumbents’.

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  • Marcoux, Mathieu, 2022. "Strategic interactions in mobile network investment with a new entrant and unobserved heterogeneity," International Journal of Industrial Organization, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:indorg:v:82:y:2022:i:c:s0167718722000054
    DOI: 10.1016/j.ijindorg.2022.102829
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    More about this item

    Keywords

    Unobserved heterogeneity; Empirical games; Telecommunications;
    All these keywords.

    JEL classification:

    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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