Merger Simulation in Mobile Telephony in Portugal
Lukasz Grzybowski and
No 07-12, Working Papers from NET Institute
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.
Keywords: lock-in; merger simulation; mobile telephony; nested logit; network effects (search for similar items in EconPapers)
JEL-codes: L13 L43 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dcm, nep-ind and nep-mic
Date: 2007-09, Revised 2007-09
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Journal Article: Merger Simulation in Mobile Telephony in Portugal (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:net:wpaper:0712
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