Measuring market competition

How do you measure the competitiveness of a market?

Is pricing the best measure of rivalry?

An article in the Globe and Mail last week looked at a potential buyer of some of the assets expected to divested as part of the Rogers / Shaw transaction. In “Xplornet eyes Freedom, but experts skeptical deal will lead to greater competition”, we read “Consumer advocates and researchers say BCE’s wireless divestitures did little to stimulate competition in Manitoba’s mobile market.” Reading further, we only see academics questioning whether lower prices would emerge.

Is price a sufficient sufficient measure of market competitiveness?

A recent report from the OECD appears to agree. In “Methodologies to Measure Market Competition” [pdf, 1.85GB], we read “There is not a unique indicator of competition that can unequivocally detect changes in competition intensity”, and cautions that measurements like market concentration can be imperfect indicators. “The purpose here is not to create a comprehensive checklist, but instead to discuss enough measures to enable a discussion on the key issues for competition authorities to consider when using such measures to measure the intensity of competition.”

As I have written before, “You just cannot compare prices without consideration of the quality of the products or services. And you cannot draw conclusions on level of competitiveness in a market based solely on prices.”

Nationwide, Canada is home to some of the world’s best mobile networks, with all industry participants continually making substantial investments in spectrum and new technology, in urban and rural communities. According to OpenSignal, rural mobile users in Canada experience download speeds surpassing those for users in most countries around the world. That 2020 OpenSignal report continued, saying “rural Canadian users have far better download speeds than users in five of the seven G7 countries in the world.”

As Dr. Christian Dippon of NERA has said in the past “Quite simply, a market cannot both be noncompetitive and offer some of the best mobile wireless services in the world.”

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