Competition in the telecommunication sector: an econometric approach to the entry of Masmovil into the Spanish mobile communications market

Abstract

In the last thirty years, the Spanish telecommunication sector has experimented a liberalization process. We study the economic impact of the entry of a new firm, MasMovil, into this market. Based on a time series analysis, we develop an error correction model and a linear demand model in order to estimate the effects of MasMovil’s entry. We conclude that even though MasMovil’s entry had an impact on the market’s performance, it was the merger of MasMoviland Pepe Phone/ Yoigo that impacted the most economic efficiency as well as consumers’ surplus.