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Political Determinants of Competition in the Mobile Telecommunication Industry

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  • Mara Faccio
  • Luigi Zingales

Abstract

We study how political factors shape competition in the mobile telecommunication sector. We show that the way a government designs the rules of the game has an impact on concentration, competition, and prices. Pro-competition regulation reduces prices, but does not hurt quality of services or investments. More democratic governments tend to design more competitive rules, while more politically connected operators are able to distort the rules in their favor, restricting competition. Government intervention has large redistributive effects: U.S. consumers would gain $65bn a year if U.S. mobile service prices were in line with German ones and $44bn if they were in line with Danish ones.

Suggested Citation

  • Mara Faccio & Luigi Zingales, 2017. "Political Determinants of Competition in the Mobile Telecommunication Industry," NBER Working Papers 23041, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23041
    Note: CF POL
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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