1 Prices and price-cost margins of mobile voice services * Corrado Andini**, Ricardo Cabral***, and Henry Chappell**** August 2006 Abstract This paper examines the determinants of prices and price-cost margins for an international sample of 177 mobile voice operators in 45 countries over the 1999-2004 period. In markets for mobile voice services, it is likely that firms with large market share have substantial market power and higher prices and price-cost margins than fringe firms do. In fact, our empirical analysis shows that market share has a positive and significant impact on prices and margins, after controlling for market characteristics and country and time effects. However, we find no relationship between market share and prices for firms with large market share. Finally, high price and high margin firms respond more similarly and less pronouncedly to an increase in market share than low price and low margin firms. JEL classification: L11, L13, L40, L96 Keywords: telecommunications, price setting behavior, market power * Please send correspondence to: Ricardo Cabral, Universidade da Madeira, Departamento de Gestão e Economia, Campus Universitário da Penteada, 9000-390 Funchal, Portugal. The authors gratefully acknowledge financial support from FCT, Portugal, attributed through the CEEAplA, as well as from ICP-Anacom, Portugal. The authors are grateful for the research assistance of Marina Fernandes and António Afonso and for comments from Santiago Budria, Joop Hartog, Steffen Hoernig, Reka Horvath, Eugénio Miravete, Robert Wright, and from participants in the 7 th CEPR Applied Industrial Organization Conference. The responsibility for any errors remains solely with the authors. **Universidade da Madeira, 9000-390 Funchal, Portugal, e-mail: andini@uma.pt *** Universidade da Madeira, 9000-390 Funchal, Portugal, e-mail: rcabral@uma.pt **** University of South Carolina, Columbia, SC 29201, USA, e-mail: chappell@moore.sc.edu