Working paper

Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications

Jonathan Elliott, Georges Vivien Houngbonon, Marc Ivaldi, and Paul Scott

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.

Keywords

Market structure; scale efficiency,; antitrust policy; infrastructure; endogenous; quality; queuing, mobile telecommunications;

JEL codes

  • D22: Firm Behavior: Empirical Analysis
  • L13: Oligopoly and Other Imperfect Markets
  • L40: General

Replaced by

Jonathan Elliott, Georges Vivien Houngbonon, Marc Ivaldi, and Paul Scott, Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications, Journal of Political Economy, 2024, forthcoming.

Reference

Jonathan Elliott, Georges Vivien Houngbonon, Marc Ivaldi, and Paul Scott, Market Structure, Investment and Technical Efficiencies in Mobile Telecommunications, TSE Working Paper, n. 21-1207, May 2021, revised April 25, 2023.

See also

Published in

TSE Working Paper, n. 21-1207, May 2021, revised April 25, 2023