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Merger Simulation in Mobile Telephony in Portugal

Author

Listed:
  • L. Grzybowski

    (SES - Département Sciences économiques et sociales - LTCI - Laboratoire Traitement et Communication de l'Information - Télécom ParisTech - IMT - Institut Mines-Télécom [Paris] - CNRS - Centre National de la Recherche Scientifique)

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.

Suggested Citation

  • L. Grzybowski, 2007. "Merger Simulation in Mobile Telephony in Portugal," Post-Print hal-02286633, HAL.
    • Handle: RePEc:hal:journl:hal-02286633
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    Cited by:

    1. Grzybowski, Lukasz & Nitsche, Rainer & Verboven, Frank & Wiethaus, Lars, 2014. "Market definition for broadband internet in Slovakia – Are fixed and mobile technologies in the same market?," Information Economics and Policy, Elsevier, vol. 28(C), pages 39-56.
    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. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107069978, January.
    4. Wellmann, Nicolas, 2019. "Hello . . . Are You Still There? An Empirical Analysis How Market Structure Affects Quality of Mobile Networks," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203579, Verein für Socialpolitik / German Economic Association.
    5. Hawthorne, Ryan & Grzybowski, Lukasz, 2021. "Distribution of the benefits of regulation vs. competition: The case of mobile telephony in South Africa," International Journal of Industrial Organization, Elsevier, vol. 74(C).
    6. Brito, Duarte & Vasconcelos, Helder, 2023. "Competitive effects of mergers and of spectrum divestment remedies in mobile telecommunication markets," Telecommunications Policy, Elsevier, vol. 47(10).
    7. Srinuan, Chalita & Srinuan, Pratompong, 2023. "A review of recent merger and acquisitions in mobile telecommunications service industry: Substantial issues and implications for policy makers," 32nd European Regional ITS Conference, Madrid 2023: Realising the digital decade in the European Union – Easier said than done? 278019, International Telecommunications Society (ITS).
    8. Lukasz Grzybowski & Pedro Pereira, 2011. "Subscription Choices and Switching Costs in Mobile Telephony," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(1), pages 23-42, January.
    9. Vélez-Velásquez, Juan Sebastián, 2019. "Merger effects with product complementarity: Evidence from Colombia’s telecommunications," Information Economics and Policy, Elsevier, vol. 49(C).

    More about this item

    Keywords

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    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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