Political Determinants of Competition in the Mobile Telecommunication Industry

Abstract We study the relationship between the presence of politicians on mobile service operators’ boards and the regulation of the mobile telecommunication sector. In countries in which mobile operators have deeper connections with local politicians, we find that rules promote competition less, ev...

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Bibliographic Details
Published in:The Review of financial studies 2022-04, Vol.35 (4), p.1983-2018
Main Authors: Faccio, Mara, Zingales, Luigi
Format: Article
Language:English
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Summary:Abstract We study the relationship between the presence of politicians on mobile service operators’ boards and the regulation of the mobile telecommunication sector. In countries in which mobile operators have deeper connections with local politicians, we find that rules promote competition less, even after we control for country fixed effects and a country’s level of corruption. Rules that promote competition are associated with lower concentration and lower prices. There is no evidence that procompetition rules are associated with worse quality, lower investments, less employment, or lower wages. Thus, all the evidence points to political connections being a form of rent-seeking.
ISSN:0893-9454
1465-7368
DOI:10.1093/rfs/hhab074