Entry, Costs Reduction, and Competition in the Portuguese Telephony Industry
AbstractWe study the eÂ¤ect of entry on costs and competition in the Portuguese mobile telephony industry. We construct and estimate a model that includes demand, network, and cost equations. The latter accounts for ineÂ¢ ciency and cost reducing eÂ¤ort. Our results suggest that the entry of a third operator in 1998 lead to signi cant cost reductions, and fostered competition. We also show that failure to account for cost reducing eÂ¤ort leads to biased estimates of competition in the industry. Finally, we also nd that our estimated price-cost margins are similar to hypothetical Nash margins, if rms are patient, and have optimistic beliefs about the industry growth.
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Bibliographic InfoPaper provided by Portuguese Competition Authority in its series Working Papers with number 05.
Length: 28 pages
Date of creation: Feb 2005
Date of revision:
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More information through EDIRC
Mobile Telephony; Entry; Competition; Efficiency; Empirical Analysis;
Other versions of this item:
- Gagnepain, Philippe & Pereira, Pedro, . "Entry, Costs Reduction, and Competition in the Portuguese Telephony Industry," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/5044, Universidad Carlos III de Madrid.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
- NEP-COM-2006-04-22 (Industrial Competition)
- NEP-CSE-2006-04-22 (Economics of Strategic Management)
- NEP-EFF-2006-04-22 (Efficiency & Productivity)
- NEP-IND-2006-04-22 (Industrial Organization)
- NEP-MIC-2006-04-22 (Microeconomics)
- NEP-TID-2006-04-22 (Technology & Industrial Dynamics)
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