Screening for Collective Dominance: The Case of the European Mobile Telecommunications

Abstract

Competition authorities and regulatory bodies have increasingly made use of econometric and statistical methods in their analysis. Due to limitations of time and data, so-called screening methods have become more and more important in order to decide whether an in-depth inquiry is warranted. This paper uses a new econometric approache to screen selected European mobile telecommunications markets for collective dominance. First, we examine the dynamics of market structure by checking the stationarity of corresponding Her ndahl- Hirschman-indices. Second, we estimate Vector-Autoregressive models (VAR) taking entry or exit of competitors into account. If the market as characterized by collective dominance, the dominant operators should be able (by de nition) to act independently from their rivals. Hence, we should only nd Granger-causality from the dominant operators' series on their non-dominant rivals in that (hypothetical) case. However, we provide evidence that most operators' subscriber series cause each other. This can be interpreted as a sign of e ective competition between those operators. An examination of the Impulse-Response-functions supports the indication of the direction of causality.