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Merger Simulation in Mobile Telephony in Portugal

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  • Lukasz Grzybowski

    ()

  • Pedro Pereira

    ()

Abstract

This article assesses the unilateral effects on prices of a merger in the Portuguese mobile telephony market. We use aggregate quarterly data from 1999 to 2005 and a nested logit model to estimate the price elasticities of demand and the marginal costs of subscription of mobile telephony. Given these estimates, we simulate the effects of the merger. We find that the available mobile telephony subscription products are close substitutes. The merger may cause substantial price increases, even in the presence of large cost efficiencies. On average, prices increase by 7-10% without cost efficiencies, and by about 6-10% with a 10% marginal cost reduction.
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Suggested Citation

  • Lukasz Grzybowski & Pedro Pereira, 2007. "Merger Simulation in Mobile Telephony in Portugal," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(3), pages 205-220, November.
    • Handle: RePEc:kap:revind:v:31:y:2007:i:3:p:205-220
    DOI: 10.1007/s11151-008-9155-2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, December.
    2. Lucio Fuentelsaz & Juan Pablo Maicas & Yolanda Polo, 2012. "Switching Costs, Network Effects, and Competition in the European Mobile Telecommunications Industry," Information Systems Research, INFORMS, vol. 23(1), pages 93-108, March.
    3. Vélez-Velásquez, Juan Sebastián, 2019. "Merger effects with product complementarity: Evidence from Colombia’s telecommunications," Information Economics and Policy, Elsevier, vol. 49(C).
    4. Juan Vélez, 2017. "Merger Effects with Product Complementarity: Evidence from Colombia’s Telecommunications," Borradores de Economia 1018, Banco de la Republica de Colombia.

    More about this item

    Keywords

    Lock-in; Merger simulation; Mobile telephony; Nested logit; Network effects; L13; L43; L93;

    JEL classification:

    • 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

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