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Publication Detailed Description
Merger simulation in mobile telephony in Portugal
Journal Title
Review of Industrial Organization
Year (definitive publication)
2007
Language
English
Country
United Kingdom
More Information
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Abstract
This article assesses the unilateral effects on prices of a merger in the Portuguese mobile telephony market. We use aggregate quarterly data from 1999 to 2005 and a nested logit model to estimate the price elasticities of demand and the marginal costs of subscription of mobile telephony. Given these estimates, we simulate the effects of the merger. We find that the available mobile telephony subscription products are close substitutes. The merger may cause substantial price increases, even in the presence of large cost efficiencies. On average, prices increase by 7-10% without cost efficiencies, and by about 6-10% with a 10% marginal cost reduction.
Acknowledgements
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Keywords
Lock-in,Merger simulation,Mobile telephony,Nested logit,Network effects
Fields of Science and Technology Classification
- Economics and Business - Social Sciences
