Competition Reform and Household Welfare : A Microsimulation Analysis of the Telecommunication Sector in Ethiopia
This paper presents a novel method for estimating the likely welfare effects of competition reforms for both current and new consumers. Using household budget survey data from 2015/16 for Ethiopia and assuming a reform scenario that dilutes the mar...
| Main Authors: | , , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/959881611167650082/Competition-Reform-and-Household-Welfare-A-Microsimulation-Analysis-of-the-Telecommunication-Sector-in-Ethiopia http://hdl.handle.net/10986/35030 |
| Summary: | This paper presents a novel method for
estimating the likely welfare effects of competition reforms
for both current and new consumers. Using household budget
survey data from 2015/16 for Ethiopia and assuming a reform
scenario that dilutes the market share of the
telecommunications state-owned monopoly to 45 percent, the
model predicts a 25.3 percent reduction in the price of
mobile services and an increase of 4.6 million new users of
mobile phone services. This reform is expected to generate a
welfare gain of 1.37 percent among all consumers. Poverty
rates are expected to decline by 0.31 percentage point,
driven by a reduction of 0.22 percentage point for current
consumers and 0.09 percentage point among new users.
Inequality would increase by 0.23 Gini point since
better-off consumers are more likely to reap the benefits of
greater competition. This method represents a powerful tool
for supporting the analysis of competition reforms in
developing countries, particularly in sectors known for
excluding significant segments of the population due to high
consumer prices. |
|---|