Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127153
Authors: 
Jeanjean, François
Houngbonon, Georges Vivien
Year of Publication: 
2015
Series/Report no.: 
26th European Regional Conference of the International Telecommunications Society (ITS), Madrid, Spain, 24-27 June 2015
Abstract: 
In this paper, we design a theoretical model to analyze the impact of the number of firms on investment in the wireless communications industry. Our model extends the Salop’s framework by introducing investment in quality that either reduces the marginal cost of production or shifts the consumers’ valuation upward. We find that an increase in the number of firms reduces their incentives to invest in quality. The impact on the aggregate industry investment can be non-monotone. These theoretical findings are supported by empirical evidence from the mobile telecommunications industry. More specifically, we find that mobile operators’ investment in network infrastructure is not affected when going from two to three firms; but decreases above three firms. In addition, there is an inverted-U relationship between the industry investment and the number of mobile operators; the maximum being reached at three or four mobile operators.
Subjects: 
Market structure
Investment
Mobile Telecommunications
JEL: 
D21
D22
L13
L40
Document Type: 
Conference Paper

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