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

Authors/Editors: Kretschmer, T.
Grajek, M.
Gugler, K.
Miscisin; I.
Published: Forthcoming
Type: Articles in Refereed Journals (International)
Published by: Review of Industrial Organization

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.