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Monopoly unveiled: Telecom breakups in the US and Mexico

Author

Listed:
  • Fausto Hernández Trillo

    (CIDE División de Economía)

  • Carlos Vladimir Ródriguez-Caballero

    (ITAM)

  • Daniel Ventosa-Santaulària

    (Centro de Investigación y Docencia Económicas (CIDE) and Aix-Marseille School of Economics (AMSE))))

Abstract

This paper examines the decline in market capitalization after a monopoly breakup to assess how financial markets value market power in the telecom sectors of the US (AT&T) and Mexico (AMX). Using univariate structural time series models, we estimate the firm's value without the breakup and compare it to post-divestiture values, revealing a 65% drop for AT&T and 32% for AMX. These findings highlight the sizeable impact of monopoly breakups on market capitalization.

Suggested Citation

  • Fausto Hernández Trillo & Carlos Vladimir Ródriguez-Caballero & Daniel Ventosa-Santaulària, 2025. "Monopoly unveiled: Telecom breakups in the US and Mexico," Economics Bulletin, AccessEcon, vol. 45(4), pages 1989-1995.
    • Handle: RePEc:ebl:ecbull:eb-24-00542
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    References listed on IDEAS

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    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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