Essays on competition and investment in the telecommunications industry.

Summary Most countries in the world, and in particular in the European Union, have sought to increase the intensity of competition in the mobile telecommunications sector, a sector characterized by a very high rate of technological progress and by complex pricing. This thesis aims to assess the impact of this increase in competition on investments in mobile telecommunications networks, the price of communications services and, furthermore, how the intensity of competition can be measured in such a dynamic framework. Using rich databases on the characteristics of mobile network operators worldwide, their financial performance indicators and the characteristics of their offerings, this thesis shows that, under certain conditions, the predictions of static economic models may no longer be valid due to the high rate of technological progress in the mobile industry. In particular, it shows that: 1) as the intensity of competition, as measured by 1-Lerner, is higher than 62%, more competition is likely to lower social welfare due to lower investment. Thus, increasing the intensity of competition involves a trade-off between static and dynamic efficiency gains when the average operator's gross margin is less than 38% of its revenue. 2) the entry of a new mobile operator may reduce the price of services based on old technology at the expense of increasing the price of services based on new technology. The reverse is true in the case of a merger, suggesting that dynamic efficiencies outweigh static efficiencies in the mobile telecommunications sector. 3) The markup is likely to under/overestimate the market power of firms in highly innovative markets such as the telecom industry, where the effect of investment is highly uncertain. Empirical tests suggest that the magnitude of this bias increases with investment. However, this increase is not statistically significant.