5 research outputs found
Consolidation in the Wireless Phone Industry
The initial wireless phone industry in the United States had many
competitors, but due to mergers and acquisitions the industry has become
highly consolidated. This paper documents the history of the
consolidation. More importantly, I use the geographic path of
consolidation to distinguish whether consolidation has been motived by
retail market power or efficiency explanations. One efficiency
explanation is that consumers prefer national coverage areas. I use data
on roaming agreements in the early cellular industry to analyze whether
contracts can substitute for roaming agreements. Finally, in joint work
with Patrick Bajari and Stephen Ryan we estimate the consumer valuation
for national coverage areas using plan demand data
Mobile Phone Mergers and Market Shares Short Term Losses and Long Term Gains
The US mobile phone industry has dramatically consolidated through
mergers. We investigate whether a merger increases the performance of a
combined carrier over the sum of its constituent parts. We first
directly compare the quantities of post-merger carriers to those of
their pre-merger predecessors. This analysis considers only two years
after a merger, as most carriers engage in new mergers after that time.
To examine possible long run implications, we also explore the cross
sectional relationship between outcomes and measures of firm size, as
firm size is increased in a merger. We examine the market share of new
subscribers. We also examine two measures of firm size: the amount of a
carrier’s geographic coverage and its past subscriber count
Consolidation in the Wireless Phone Industry
The initial wireless phone industry in the United States had many
competitors, but due to mergers and acquisitions the industry has become
highly consolidated. This paper documents the history of the
consolidation. More importantly, I use the geographic path of
consolidation to distinguish whether consolidation has been motived by
retail market power or efficiency explanations. One efficiency
explanation is that consumers prefer national coverage areas. I use data
on roaming agreements in the early cellular industry to analyze whether
contracts can substitute for roaming agreements. Finally, in joint work
with Patrick Bajari and Stephen Ryan we estimate the consumer valuation
for national coverage areas using plan demand data
Measuring the Efficiency of an FCC Spectrum Auction
FCC spectrum auctions sell licenses to provide mobile phone service in
designated geographic territories. We propose a method to structurally
estimate the deterministic component of bidder valuations and apply it
to the 1995-1996 C-block auction. We base our estimation of bidder
values on a pairwise stability condition, which implies that two bidders
cannot exchange licenses in a way that increases total surplus. Pairwise
stability holds in many theoretical models of simultaneous ascending
auctions, including some models of intimidatory collusion and demand
reduction. Pairwise stability is also approximately satisfied in data
that we examine from economic experiments. The lack of post-auction
resale also suggests pairwise stability. Using our estimates of
deterministic valuations, we measure the allocative efficiency of the
C-block outcome
Measuring the Efficiency of an FCC Spectrum Auction
FCC spectrum auctions sell licenses to provide mobile phone service in
designated geographic territories. We propose a method to structurally
estimate the deterministic component of bidder valuations and apply it
to the 1995-1996 C-block auction. We base our estimation of bidder
values on a pairwise stability condition, which implies that two bidders
cannot exchange licenses in a way that increases total surplus. Pairwise
stability holds in many theoretical models of simultaneous ascending
auctions, including some models of intimidatory collusion and demand
reduction. Pairwise stability is also approximately satisfied in data
that we examine from economic experiments. The lack of post-auction
resale also suggests pairwise stability. Using our estimates of
deterministic valuations, we measure the allocative efficiency of the
C-block outcome