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Political Determinants of Competition in the Mobile Telecommunication Industry

Author

Listed:
  • Mara Faccio
  • Luigi Zingales
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.

Suggested Citation

  • Mara Faccio & Luigi Zingales, 2022. "Political Determinants of Competition in the Mobile Telecommunication Industry," The Review of Financial Studies, Society for Financial Studies, vol. 35(4), pages 1983-2018.
    • Handle: RePEc:oup:rfinst:v:35:y:2022:i:4:p:1983-2018.
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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