Entry, Costs Reduction, and Competition in the Portuguese Mobile Telephony Industry

Philippe Gagnepain and Pedro Pereira

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Abstract: We study the effect of entry on costs and competition in the Portuguese mobile telephony industry.\ We construct and estimate a model that includes demand, network, and cost equations. The latter accounts for inefficiency and cost reducing effort. Our results suggest that the entry of a third operator in 1998 lead to significant cost reductions, and fostered competition. We also show that failure to account for cost reducing effort leads to biased estimates of competition in the industry. Finally, we also find that our estimated price-cost margins are similar to hypothetical Nash margins, if firms are patient, and have optimistic beliefs about the industry growth.

Date: 2007
Note: View the original document on HAL open archive server: https://hal.science/hal-00622837
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Citations: View citations in EconPapers (12)

Published in International Journal of Industrial Organization, 2007, 25, pp.461-481

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Related works:
Journal Article: Entry, costs reduction, and competition in the Portuguese mobile telephony industry (2007)
Working Paper: Entry, Cost Reduction and Competition in The Portuguese Mobile Telephone Industry (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00622837

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