This project explores market structure and performance in cellular telephony. It contrasts China and other countries regarding the effect of market structure on mobile telephony performance and evaluates China’s cellular sector performance relative to its declared public policy goals in telecommunications. The results indicate that lower market concentration can increase mobile penetration. The negative relationship of market concentration and price levels as well as the positive relationship of market concentration and labor productivity can be reasonably explained. This study finds evidence to support China’s efforts to promote mobile telecommunications by encouraging competition. However, the benefits of increased competition are likely smaller compared to other countries. Regarding China’s competition goals in telecommunications, the regulators have made a great effort in encouraging competition in the cellular sector and their efforts are well rewarded. However, they have room to foster an even more competitive market structure in order to reap even greater benefits.
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