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Merger Simulation in Mobile Telephony in Portugal

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Author Info

  • Lukasz Grzybowski

    ()

  • Pedro Pereira

    ()

Abstract

This article assesses the unilateral effects on prices of a merger in the Portuguese mobile telephony market. We use aggregate quarterly data from 1999 to 2005 and a nested logit model to estimate the price elasticities of demand and the marginal costs of subscription of mobile telephony. Given these estimates, we simulate the effects of the merger. We find that the available mobile telephony subscription products are close substitutes. The merger may cause substantial price increases, even in the presence of large cost efficiencies. On average, prices increase by 7-10% without cost efficiencies, and by about 6-10% with a 10% marginal cost reduction.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s11151-008-9155-2
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 31 (2007)
Issue (Month): 3 (November)
Pages: 205-220

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Handle: RePEc:kap:revind:v:31:y:2007:i:3:p:205-220

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: Lock-in; Merger simulation; Mobile telephony; Nested logit; Network effects; L13; L43; L93;

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  1. Cadima, Nuno & Pita Barros, Pedro Luis, 2000. "The Impact of Mobile Phone Diffusion on the Fixed-Link Network," CEPR Discussion Papers 2598, C.E.P.R. Discussion Papers.
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