Merger Simulation in Mobile Telephony in Portugal

Lukasz Grzybowski and Pedro Pereira

No 07-12, Working Papers from NET Institute

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.

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)
Pages: 24 pages
Date: 2007-09, Revised 2007-09
New Economics Papers: this item is included in nep-com, nep-dcm, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Merger Simulation in Mobile Telephony in Portugal (2007)
Working Paper: 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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