Journal Article

AT&T AND T-MOBILE: ECONOMIES AS AN ANTITRUST DEFENSE APPLIED

Russell Pittman and Yan Li

in Journal of Competition Law & Economics

Volume 9, issue 1, pages 49-63
Published in print March 2013 | ISSN: 1744-6414
Published online January 2013 | e-ISSN: 1744-6422 | DOI: https://dx.doi.org/10.1093/joclec/nhs041
AT&T AND T-MOBILE: ECONOMIES AS AN ANTITRUST DEFENSE APPLIED

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From the beginning, the debate on the likely results of the proposed acquisition of T-Mobile USA by AT&T focused more on the claims of the parties that “immense” merger efficiencies would overwhelm any apparent losses of competition than on the presence or absence of those losses, and the factors that might affect them, such as market definition. The merging companies based their “economic model” of the merger on estimates of efficiencies derived from AT&T's “engineering model,” without addressing the credibility of the results of the latter in the context of the economics literature on the telecommunications sector. This article argues that the economics literature on economies of scale (especially) and economies of density in mobile telephony and elsewhere suggests caution in expecting such massive cost reductions from increasing the size of an already very large firm. It closes with an argument for the application of this perspective, where appropriate, in future discussions of merger efficiencies.

Keywords: K21; L40; L96

Journal Article.  6877 words. 

Subjects: Energy and Utilities ; Antitrust Issues and Policies

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