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Does one more or one less mobile operator affect prices? A comprehensive ex-post evaluation of entries and mergers in European mobile telecommunication markets

Author

Listed:
  • Gergely Csorba

    (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)

  • Zoltan Papai

    (Infrapont Economic Consulting)

Abstract

This paper estimates the impact of entries and mergers on the price of mobile voice services in a panel database of 27 European Member States between 2003 and 2010. Our difference-in-differences econometric methodology exploits the variance in different structural changes between countries to separate the respective effects. Our results show that the effect of entry crucially depends on the number of active operators and the type of entrant, and not controlling for these differences might lead to misleading conclusions. We find no robust evidence that entry has a price-decreasing effect on markets with originally 2 operators. However, the entry of a 4th operator does have a price-decreasing effect, but with different dynamics concerning the entrant's type. When we separate entry effects for the subsequent years, we show that the significant price-decreasing effects for local operators entering occur only in the first year after entry, while the price-decreasing effects for multinational entries are significantly larger on the long-run. Last, we find no price-increasing effects of 5-to-4 mergers, but a long run price-increasing effect of a 4-to-3 merger.

Suggested Citation

  • Gergely Csorba & Zoltan Papai, 2015. "Does one more or one less mobile operator affect prices? A comprehensive ex-post evaluation of entries and mergers in European mobile telecommunication markets," CERS-IE WORKING PAPERS 1541, Institute of Economics, Centre for Economic and Regional Studies.
  • Handle: RePEc:has:discpr:1541
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    References listed on IDEAS

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    Cited by:

    1. M. Grajek & K. Gugler & T. Kretschmer & I. Mişcişin, 2019. "Static or Dynamic Efficiency: Horizontal Merger Effects in the Wireless Telecommunications Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(3), pages 375-402, November.
    2. Otello Ardovino & Marco Delmastro, 2021. "An empirical analysis of the impact of structural changes in the mobile market," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(2), pages 257-274, June.
    3. Norbert Maier & Julie Runge Jørgensen & Asger Lunde & Otto Toivanen, 2021. "Ex-post Analysis of the TeliaSonera-Chess 2005 Merger," De Economist, Springer, vol. 169(2), pages 141-178, May.

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    More about this item

    Keywords

    ex-post evaluation; mobile telecommunications; entry; merger; difference-in-differences estimations;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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