Click here for full paperThis paper estimates a two-part model that separately captures the effects of market-wide concentration and firm-specific strategies that impact that concentration. A binary choice model that relates concentration in a cross section of geographically granular U.S. mobile wireless markets and subscribership confirms an inverted-U relationship. This relationship is robust to endogeneity of average prices and the market HHIs. Using the same dataset, a multinomial logit model finds strong evidence that investment in spectrum and 4G infrastructure contributes to a carrier’s market share relative to its rivals in the same markets. Furthermore, indexes of service quality are found to be directly related to carriers’ investments.
