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Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications

Author

Listed:
  • Jonathan Elliott

    (JHU - Johns Hopkins University [Baltimore])

  • Georges Vivien Houngbonon

    (WBG = GBM - World Bank Group = Groupe Banque Mondiale)

  • Marc Ivaldi

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Paul T. Scott

    (NYU - New York University [New York] - NYU - NYU System)

Abstract

We develop a model of competition in prices and infrastructure among mobile network operators. Although consolidation increases market power, it can lead to more efficient data transmission due to economies of scale, which we derive from physical principles. After estimating our model with French consumer and infrastructure data, equilibrium simulations reveal that while prices decrease with the number of firms, so do download speeds. Our framework also allows us to quantify the impact of spectrum allocation. The marginal social value of spectrum exceeds firms' willingness to pay in our model as well as observed prices in spectrum auctions.

Suggested Citation

  • Jonathan Elliott & Georges Vivien Houngbonon & Marc Ivaldi & Paul T. Scott, 2024. "Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications," Post-Print hal-04831225, HAL.
    • Handle: RePEc:hal:journl:hal-04831225
    DOI: 10.1086/734132
    Note: View the original document on HAL open archive server: https://hal.science/hal-04831225v1
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    References listed on IDEAS

    as
    1. Ying Fan & Chenyu Yang, 2020. "Competition, Product Proliferation, and Welfare: A Study of the US Smartphone Market," American Economic Journal: Microeconomics, American Economic Association, vol. 12(2), pages 99-134, May.
    2. Joseph Cullen & Nicolas Schutz & Oleksandr Shcherbakov, 2020. "The Welfare Effects of Early Termination Fees in the US Wireless Industry," CRC TR 224 Discussion Paper Series crctr224_2020_247, University of Bonn and University of Mannheim, Germany.
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    Citations

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    Cited by:

    1. Marcoux, Mathieu, 2022. "Strategic interactions in mobile network investment with a new entrant and unobserved heterogeneity," International Journal of Industrial Organization, Elsevier, vol. 82(C).
    2. Marc Bourreau & Yutec Sun, 2022. "Competition and Quality: Evidence from the Entry of Mobile Network Service," Working Papers 22-04, NET Institute.
    3. Michele Fioretti & Junnan He & Jorge Tamayo, 2024. "Prices and Concentration: A U-Shape? Theory and Evidence from Renewables," Working Papers hal-04631762, HAL.
    4. Yassine Lefouili & Leonardo Madio, 2025. "Mergers and Investments: Where Do We Stand?," Working Papers hal-05129593, HAL.
    5. Ciriani, Stéphane & Jeanjean, François, 2025. "Is Draghi report really wrong about telecoms? (An overview of academic papers on telecom market structure and mergers)," 33rd European Regional ITS Conference, Edinburgh, 2025: Digital innovation and transformation in uncertain times 331262, International Telecommunications Society (ITS).
    6. Priyanka Sharma & Edward J. Oughton & Aleksan Shanoyan, 2024. "ORAN Drives Higher Returns on Investments in Urban and Suburban Regions," Papers 2412.18346, arXiv.org.

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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