Gagnepain, PhilippePereira, Pedro2014-05-272014-05-272007International Journal of Industrial Organization, (2007), 25 (3), 461-4810167-7187https://hdl.handle.net/10016/5037We study the effect of entry on costs and competition in the Portuguese mobile telephony industry. We construct and estimate a model that includes demand, network, and cost equations. The latter accounts for inefficiency and cost reducing effort. Our results suggest that the entry of a third operator in 1998 lead to significant cost reductions and fostered competition. We also show that failure to account for cost reducing effort leads to biased estimates of competition in the industry. Finally, we also find that our estimated price–cost margins are similar to hypothetical Nash margins, if firms are patient and have optimistic beliefs about the industry growth.application/pdfeng© 2006 Elsevier B.V.Mobile telephonyEntry compettionEfficiencyEmpirical analysisresearch articleL13L43L93Economía10.1016/j.ijindorg.2006.05.007open access4613481International Journal of Industrial Organization25