We study the dual relationship between market structure and prices and between market
structure
and investment in mobile telecommunications. Using a uniquely constructed panel of
mobile
operators’ prices and accounting information across 33 OECD countries between 2002
and 2014,
we document that more concentrated markets lead to higher end user prices.
Furthermore, the
y also lead to higher investment per mobile operator, though the impact on total
investment is not
conclusive. Our findings are not only relevant for the current consolidation
wave in the
telecommunications industry. More generally, they stress that compet
ition and
regulatory
authorities should take seriously the potential trade
-off between market power effects
and
efficiency gains stemming from agreements between firms.