Static or Dynamic Efficiency: Horizontal Merger Effects in the Wireless Telecommunications Industry

40 Pages Posted: 2 Feb 2018  

Michal Grajek

ESMT European School of Management and Technology

Klaus Peter Gugler

Vienna University of Economics and Business; European Corporate Governance Institute (ECGI)

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

Ion Miscisin

University of Vienna

Date Written: December 19, 2017

Abstract

This paper studies five mergers in the European wireless telecommunication industry and analyzes their impact on prices and capital expenditures of both merging carriers and their rivals. We find substantial heterogeneity in the relationship between increases in concentration and carriers’ prices. The specifics of each merger case clearly matter. Moreover, we find a positive correlation between the price and the investment effects; when the prices after merger increase (decrease), the investments increase (decrease) too. Thus, we document a trade-off between static and dynamic efficiencies of mergers.

Keywords: telecom mergers, static and dynamic efficiency, difference-in-difference

JEL Classification: L22, O33, G34, L96

Suggested Citation

Grajek, Michal and Gugler, Klaus Peter and Kretschmer, Tobias and Miscisin, Ion, Static or Dynamic Efficiency: Horizontal Merger Effects in the Wireless Telecommunications Industry (December 19, 2017). ESMT Working Paper No. 17-04. Available at SSRN: https://ssrn.com/abstract=3116744 or http://dx.doi.org/10.2139/ssrn.3116744

Michal Grajek (Contact Author)

ESMT European School of Management and Technology ( email )

Schlossplatz 1
Berlin, 10178
Germany

Klaus Gugler

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

HOME PAGE: http://www.wu.ac.at/iqv/mitarbeiter/gugler

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, 80539
Germany

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Ion Miscisin

University of Vienna ( email )

Bruenner Strasse 72
Vienna, Vienna 1090
Austria

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