Political Determinants of Competition in the Mobile Telecommunication Industry

59 Pages Posted: 6 Jan 2017 Last revised: 4 May 2018

See all articles by Mara Faccio

Mara Faccio

Purdue University - Krannert School of Management; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Luigi Zingales

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: April 1, 2018

Abstract

We study how political factors can shape competition in the mobile telecommunication sector. We show that the way a government designs the rules of the game has an impact on concentration, competition, and prices. Pro-competition rules reduce prices, but do not hurt the quality of services or investments. More democratic governments tend to design rule that are more pro-competition, while more politically connected operators are able to distort the rules in their favor, restricting competition. Government intervention has large redistributive effects: U.S. consumers would gain $65bn ($44bn) a year if U.S. mobile service prices were in line with Germany (Denmark).

Keywords: Political Connections, Capture, Antitrust

JEL Classification: P16, D72, L11

Suggested Citation

Faccio, Mara and Zingales, Luigi, Political Determinants of Competition in the Mobile Telecommunication Industry (April 1, 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 494/2016, Available at SSRN: https://ssrn.com/abstract=2893869 or http://dx.doi.org/10.2139/ssrn.2893869

Mara Faccio

Purdue University - Krannert School of Management ( email )

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National Bureau of Economic Research (NBER) ( email )

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National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

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Luigi Zingales (Contact Author)

University of Chicago - Booth School of Business ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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