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Political Determinants of Competition in the Mobile Telecommunication Industry

57 Pages Posted: 6 Jan 2017 Last revised: 20 Jan 2017

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: January 4, 2017

Abstract

We study how political factors 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 regulation reduces prices, but does not hurt quality of services or investments. More democratic governments tend to design more competitive rules, 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 a year if U.S. mobile service prices were in line with German ones and $44bn if they were in line with Danish ones.

Keywords: Political Economy, Capture, Antitrust

JEL Classification: P16, D72, L11

Suggested Citation

Faccio, Mara and Zingales, Luigi, Political Determinants of Competition in the Mobile Telecommunication Industry (January 4, 2017). 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 )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

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B-1050 Brussels
Belgium

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

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Luigi Zingales (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

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London, EC1V 3PZ
United Kingdom

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