Static or Dynamic Efficiency: Horizontal Merger Effects in the Wireless Telecommunications Industry
40 Pages Posted: 2 Feb 2018
Date Written: December 19, 2017
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: Suggested Citation