Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, April 11, 2018

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

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), and Ion Miscisin University of Vienna study Static or Dynamic Efficiency: Horizontal Merger Effects in the Wireless Telecommunications Industry.

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.

https://lawprofessors.typepad.com/antitrustprof_blog/2018/04/static-or-dynamic-efficiency-horizontal-merger-effects-in-the-wireless-telecommunications-industry.html

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