Mergers in emerging markets with network externalities: the case of telecoms

Arbeitspapier

This paper develops a unifying framework to understand competition issues in network industries. It focuses on the telecom(munication) industry and takes two specific effects of this industry into account. First, the telecom industry is in continuous evolution and alliances affect not only the current market power of the firms but also the evolution of the industry. Second, the production of services in the industry is evolving towards the provision of integrated services in a “system” that benefits from strong “network externalities”. The analysis suggests that the antitrust authorities should capture as well such effects as the magnitude of the installed bases, the compatibility of the alliance’s system with other systems, the switching costs for customers and application writers, and the “credibility” of the alliance to offer the service. The developed framework builds on the existing models of networks and combines the different network effects. The relevance of the framework is shown for two important merger cases (WorldCom- MCI and MSG cases), involving respectively an existing market and an emerging one.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 00-23

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dewatripont, Mathias ; Legros, Patrick
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/50933
• Last update: 10.03.2025, 11:42 AM CET