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Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications

Author

Listed:
  • Jonathan Elliott

    (JHU - Johns Hopkins University)

  • Georges Vivien Houngbonon

    (World Bank Group)

  • Marc Ivaldi

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université 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. Philippe Jehiel & Benny Moldovanu, 2003. "An economic perspective on auctions [‘An efficient as cending-bid auction for multiple objects’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(36), pages 269-308.
    2. repec:oup:ecpoli:v:18:y:2003:i:36:p:269-308 is not listed on IDEAS
    3. Katja Seim & V. Brian Viard, 2011. "The Effect of Market Structure on Cellular Technology Adoption and Pricing," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 221-251, May.
    4. Mulligan, James G, 1983. "The Economies of Massed Reserves," American Economic Review, American Economic Association, vol. 73(4), pages 725-734, September.
    5. Verboven, Frank & Bourreau, Marc & Sun, Yutec, 2018. "Market Entry, Fighting Brands and Tacit Collusion: The Case of the French Mobile Telecommunications Market," CEPR Discussion Papers 12866, C.E.P.R. Discussion Papers.
    6. repec:bla:ecpoli:v:18:y:2003:i:36:p:269-308 is not listed on IDEAS
    7. Christopher Conlon & Jeff Gortmaker, 2020. "Best practices for differentiated products demand estimation with PyBLP," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1108-1161, December.
    8. Joseph Cullen & Nicolas Schutz & Oleksandr Shcherbakov, 2020. "Welfare Analysis of Equilibria With and Without Early Termination Fees in the US Wireless Industry," Staff Working Papers 20-9, Bank of Canada.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Michele Fioretti & Junnan He & Jorge Tamayo, 2024. "Prices and Concentration: A U-Shape? Theory and Evidence from Renewables," Working Papers hal-04631762, HAL.
    2. Lefouili, Yassine & Madio, Leonardo, 2025. "Mergers and Investments: Where Do We Stand?," TSE Working Papers 25-1617, Toulouse School of Economics (TSE).
    3. 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).
    4. Marc Bourreau & Yutec Sun, 2022. "Competition and Quality: Evidence from the Entry of Mobile Network Service," Working Papers 22-04, NET Institute.
    5. 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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    More about this item

    Keywords

    Market structure; Scale efficiency; Antitrust policy; Infrastructure; Endogenous; Quality; Queuing; Mobile telecommunications;
    All these keywords.

    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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