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Merger Simulation in Mobile Telephony in Portugal

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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.

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Authors and Affiliations

  1. Competition Commission, Victoria House, Southampton Row, London, WC1B 4AD, UK

    Lukasz Grzybowski

  2. Autoridade da Concorrência, Rua Laura Alves, no 4, 6°, 1050-188, Lisboa, Portugal

    Pedro Pereira

Authors
  1. Lukasz Grzybowski
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  2. Pedro Pereira
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Correspondence to Pedro Pereira.

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Grzybowski, L., Pereira, P. Merger Simulation in Mobile Telephony in Portugal. Rev Ind Organ 31, 205–220 (2007). https://doi.org/10.1007/s11151-008-9155-2

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  • DOI: https://doi.org/10.1007/s11151-008-9155-2

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