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The Impact of Entry and Merger on the Price of Mobile Telecommunications Services

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  • Houngbonon, Georges Vivien

Abstract

According to static models of industrial organization, a rise in competition decreases prices. In this paper, I test whether this conclusion can be reversed in the mobile telecommunications markets where dynamic e ciency e ects might be signi cant. The empirical test relies on the change in the intensity of competition introduced by the entry of the fourth mobile operator in France and the merger between the third and the fourth mobile operators in Austria. Using a hedonic price model and a double-di erence matching identi cation strategy, I nd that the entry in the French market has raised the unit price of mobile data services by 4 dollars per Gigabyte; contrary to the merger in the Austrian market which lowers the unit price of mobile data by 6 dollars per Gigabyte. These results suggest that the dynamic e ciency e ects actually outweigh the static ones in the mobile telecommunications industry. Therefore, a merger from four to three mobile operators may be welfare enhancing.

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  • Houngbonon, Georges Vivien, 2015. "The Impact of Entry and Merger on the Price of Mobile Telecommunications Services," 26th European Regional ITS Conference, Madrid 2015 127148, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itse15:127148
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    References listed on IDEAS

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    Cited by:

    1. Berne, Michel & Vialle, Pierre & Whalley, Jason, 2016. "Is competition just a question of numbers? An analysis of the impact of the entry of Free Mobile into the French mobile telecommunications market," 27th European Regional ITS Conference, Cambridge (UK) 2016 148659, International Telecommunications Society (ITS).
    2. Ueda, Masashi, 2021. "A Study on the Optimal Number of Mobile Carriers: Discussion of Discussion of Magic Number – three or four," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238058, International Telecommunications Society (ITS).
    3. Berne, Michel & Vialle, Pierre & Whalley, Jason, 2019. "An analysis of the disruptive impact of the entry of Free Mobile into the French mobile telecommunications market," Telecommunications Policy, Elsevier, vol. 43(3), pages 262-277.

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    More about this item

    Keywords

    Dynamic Efficieny Effects; Ex-post Merger Evaluation; Nolinear Pricing; Mobile Telecommunications;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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