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Games with Unobservable Heterogeneity and Multiple Equilibria : An Application to Mobile Telecommunications

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  • Mathieu Marcoux

    (Université de Montréal, CIREQ)

Abstract

To shed light on the limited success of competition enhancing policies in mobile telecommunications, I estimate a game of transceivers’ locations between national incumbents and a new entrant in Canada. I recover player-specific unobserved heterogeneity from bids for spectrum licenses to address the unavailability of regressors required to identify incumbents’ responses to the new entrant’s decisions. I find that incumbents benefitting from important economies of density is a plausible explanation for policies’ drawbacks. I then evaluate the equilibrium effect of subsidizing the new entrant’s transceivers and find that this alternative proposition increases its investments while only slightly modifying incumbents.

Suggested Citation

  • Mathieu Marcoux, 2019. "Games with Unobservable Heterogeneity and Multiple Equilibria : An Application to Mobile Telecommunications," Cahiers de recherche 01-2019, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    • Handle: RePEc:mtl:montec:01-2019
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    Keywords

    multiple equilibria; unobserved heterogeneity; empirical games; telecommunications;
    All these keywords.

    JEL classification:

    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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