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Endogenous Sunk Costs in the Market for Mobile Telecommunications - The Role of Licence Fees

  • Harald Gruber

    (European Investment Bank)

Registered author(s):

    An oligopoly model with endogenous sunk costs illustrates the trade off between ex ante extraction of oligopoly rents and market entry of firms in the mobile telecommunications industry. Competitive bidding for radio frequency licences provides scope for setting market structure endogenously - the higher the licence fee, the lower the number of competitive firms sustained by the market. High licence fees may be a signal for post-entry collusion.

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    File URL: http://www.esr.ie/Vol33_1Gruber.pdf
    File Function: First version, 2002
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    Article provided by Economic and Social Studies in its journal Economic and Social Review.

    Volume (Year): 33 (2002)
    Issue (Month): 1 ()
    Pages: 55-64

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    Handle: RePEc:eso:journl:v:33:y:2002:i:1:p:55-64
    Contact details of provider: Web page: http://www.esr.ie

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    1. Paul Klemperer, 2000. "What Really Matters in Auction Design," Economics Series Working Papers 2000-W26, University of Oxford, Department of Economics.
    2. S. Illeris & G. Akehurst, 2001. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 21(1), pages 1-4, January.
    3. Offerman, T.J.S. & Potters, J.J.M., 2000. "Does Auctioning of Entry Licences Affect Consumers Prices? An Experimental Study," Discussion Paper 2000-53, Tilburg University, Center for Economic Research.
    4. Peter Cramton, 1995. "Money Out of Thin Air: The Nationwide Narrowband PCS Auction," Papers of Peter Cramton 95jems, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
    5. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
    6. Gruber, Harald & Verboven, Frank, 2001. "The evolution of markets under entry and standards regulation -- the case of global mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1189-1212, July.
    7. repec:dgr:uvatin:20000046 is not listed on IDEAS
    8. repec:dgr:kubcen:200053 is not listed on IDEAS
    9. Gruber, Harald, 1999. "An investment view of mobile telecommunications in the European Union," Telecommunications Policy, Elsevier, vol. 23(7-8), pages 521-538, August.
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