Working Paper: NBER ID: w23041
Authors: Mara Faccio; Luigi Zingales
Abstract: We study how political factors shape competition in the mobile telecommunication sector. We show that the way a government designs the rules of the game has an impact on concentration, competition, and prices. Pro-competition regulation reduces prices, but does not hurt quality of services or investments. More democratic governments tend to design more competitive rules, while more politically connected operators are able to distort the rules in their favor, restricting competition. Government intervention has large redistributive effects: U.S. consumers would gain $65bn a year if U.S. mobile service prices were in line with German ones and $44bn if they were in line with Danish ones.
Keywords: No keywords provided
JEL Codes: D72; L11; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pro-competition regulation (K21) | reduces prices (D40) |
| pro-competition regulation (K21) | does not hurt quality of services (L15) |
| pro-competition regulation (K21) | does not hurt investments (G11) |
| introduction of number portability (L96) | reduces market share of the two largest operators (D49) |
| introduction of number portability (L96) | decreases price of a 1GB mobile broadband plan (L96) |
| more democratic governments (P16) | design more competitive rules (D47) |
| more pro-competition rules (L49) | raise relatively more money in auctions (D44) |
| politically connected operators (L59) | distort rules in their favor (P37) |
| government intervention (O25) | restrict or promote competition (L49) |