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At&T And T-Mobile: Economies As An Antitrust Defense Applied

Author

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  • Russell Pittman
  • Yan Li

Abstract

From the beginning, the debate on the likely results of the proposed acquisition of T-Mobile USA by AT&T focused more on the claims of the parties that “immense” merger efficiencies would overwhelm any apparent losses of competition than on the presence or absence of those losses, and the factors that might affect them, such as market definition. The merging companies based their “economic model” of the merger on estimates of efficiencies derived from AT&T's “engineering model,” without addressing the credibility of the results of the latter in the context of the economics literature on the telecommunications sector. This article argues that the economics literature on economies of scale (especially) and economies of density in mobile telephony and elsewhere suggests caution in expecting such massive cost reductions from increasing the size of an already very large firm. It closes with an argument for the application of this perspective, where appropriate, in future discussions of merger efficiencies.

Suggested Citation

  • Russell Pittman & Yan Li, 2013. "At&T And T-Mobile: Economies As An Antitrust Defense Applied," Journal of Competition Law and Economics, Oxford University Press, vol. 9(1), pages 49-63.
  • Handle: RePEc:oup:jcomle:v:9:y:2013:i:1:p:49-63.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhs041
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    Cited by:

    1. Ben Mermelstein & Volker Nocke & Mark A. Satterthwaite & Michael D. Whinston, 2020. "Internal versus External Growth in Industries with Scale Economies: A Computational Model of Optimal Merger Policy," Journal of Political Economy, University of Chicago Press, vol. 128(1), pages 301-341.
    2. Nathan H. Miller & Gloria Sheu, 2021. "Quantitative Methods for Evaluating the Unilateral Effects of Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 143-177, February.

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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