Innovation And Market Concentration In Europe's Mobile Phone Industries: Evidence From The Transition From 2G To 3G

Aiming at both low prices and innovation, policy makers and economists have long argued about the optimal intensity of competition. While the current discussion in telecommunication regulation points out that competition can be detrimental to innovation due to the low appropriability of rents established economic approaches advocate competition to be conducive to innovation. This reflects the dispute in economics between Schumpeterian and neoclassical theories. Aghion et al (2005) offered reconciliation by modelling an inverted U relationship, which in this paper, the author tests for European mobile phone providers.