Loss Aversion and Collusion: The Case of Rent Fixing for Mobile Communication Equipment Installation Sites

From 2013 to 2019, three mobile telecommunications companies (SKT, KT, and LGU+) allegedly colluded to lower rents for the installation of mobile communication facilities for building owners. In the rental market for mobile communication equipment installations, it is difficult to say that there is meaningful demand competition among mobile carriers due to market characteristics. Therefore, it is worthwhile to analyze how collusion can lower rents regardless of competition. This study assumes that building owners have reference-dependent utility with loss aversion and negotiate leases based on the highest rent offered by mobile carriers. The theoretical analysis shows that, compared to non-collusion, rent-fixing between mobile carriers can lower rents by eliminating building owners’ reference-dependent loss aversion.