Effects of Regulatory Policy on Market Structure and Performance in OECD Mobile Markets

Competition is emerging in OECD Member State mobile telephony markets, albeit somewhat unevenly and at a slower rate. The study addresses the relationship between market structure and performance, and examines the impact of regulatory policy on competition in these markets. A structural model is estimated on a panel of 27 OECD Member States mobile markets for the period 1998-2004. This simultaneous equations model contains equations for market concentration, price, cellular density and profit. Empirical results indicate that mobile telephone market concentration impacts positively on price and profit, supporting the market-power hypothesis. The market-power hypothesis suggests that antitrust or regulatory action may be productive. Also, the study confirms the role of regulatory policy in promoting mobile market competition