Competitive effects of mergers and of spectrum divestment remedies in mobile telecommunication markets

Mobile communications markets are usually characterized by a limited number of operators. Despite being markets exhibiting high concentration, many mobile network operator mergers have been recently proposed and approved subject to remedies (or commitments by the merging parties). The research investigates the merger induced effects on consumer surplus, in which a model has three firms selling horizontally and vertically differentiated products. Findings show: joint management of spectrum enables merging parties to offer higher quality service—for which customers are willing to pay more; mergers may benefit consumers even in the absence of any cost-related efficiencies; and when the merger has a negative impact on consumer surplus, remedies based on reallocation of spectrum are not very likely to change this outcome.