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Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications

Author

Listed:
  • Elliott, Jonathan
  • Houngbonon, Georges Vivien
  • Ivaldi, Marc
  • Scott, Paul

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

  • Elliott, Jonathan & Houngbonon, Georges Vivien & Ivaldi, Marc & Scott, Paul, 2021. "Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications," TSE Working Papers 21-1207, Toulouse School of Economics (TSE), revised 26 Jun 2024.
    • Handle: RePEc:tse:wpaper:125551
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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.
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    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. Priyanka Sharma & Edward J. Oughton & Aleksan Shanoyan, 2024. "ORAN Drives Higher Returns on Investments in Urban and Suburban Regions," Papers 2412.18346, arXiv.org.
    2. Michele Fioretti & Junnan He & Jorge Tamayo, 2024. "Prices and Concentration: A U-Shape? Theory and Evidence from Renewables," Working Papers hal-04631762, HAL.
    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. Lefouili, Yassine & Madio, Leonardo, 2025. "Mergers and Investments: Where Do We Stand?," TSE Working Papers 25-1617, Toulouse School of Economics (TSE).

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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:

    • 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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