Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa

Many developing countries have experienced significant developments in their telecommunications network. Countries in Africa are no exception to this. The paper examines what factor facilitates most network expansion using micro data from 45...

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Main Author:	Iimi, Atsushi
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION
Online Access:	http://documents.worldbank.org/curated/en/2007/04/7537662/price-structure-network-externalities-telecommunications-industry-evidence-sub-saharan-africa http://hdl.handle.net/10986/7020

id	okr-10986-7020
recordtype	oai_dc
spelling	okr-10986-70202021-04-23T14:02:33Z Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa Iimi, Atsushi ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION Many developing countries have experienced significant developments in their telecommunications network. Countries in Africa are no exception to this. The paper examines what factor facilitates most network expansion using micro data from 45 fixed-line and mobile telephone operators in 18 African countries. In theory the telecommunications sector has two sector-specific characteristics: network externalities and discriminatory pricing. It finds that many telephone operators in the region use peak and off-peak prices and termination-based price discrimination, but are less likely to rely on strategic fee schedules such as tie-in arrangements. The estimated demand function based on a discreet consumer choice model indicates that termination-based discriminatory pricing can facilitate network expansion. It also shows that the implied price-cost margins are significantly high. Thus, price liberalization could be conducive to development of the telecommunications network led by the private sector. Some countries in Africa are still imposing certain price restrictions. But more important, it remains a policy issue how the authorities should ensure reciprocal access between operators at reasonable cost. 2012-06-04T18:15:29Z 2012-06-04T18:15:29Z 2007-04 http://documents.worldbank.org/curated/en/2007/04/7537662/price-structure-network-externalities-telecommunications-industry-evidence-sub-saharan-africa http://hdl.handle.net/10986/7020 English Policy Research Working Paper; No. 4200 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION
spellingShingle	ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION Iimi, Atsushi Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa
geographic_facet	Africa
relation	Policy Research Working Paper; No. 4200
description	Many developing countries have experienced significant developments in their telecommunications network. Countries in Africa are no exception to this. The paper examines what factor facilitates most network expansion using micro data from 45 fixed-line and mobile telephone operators in 18 African countries. In theory the telecommunications sector has two sector-specific characteristics: network externalities and discriminatory pricing. It finds that many telephone operators in the region use peak and off-peak prices and termination-based price discrimination, but are less likely to rely on strategic fee schedules such as tie-in arrangements. The estimated demand function based on a discreet consumer choice model indicates that termination-based discriminatory pricing can facilitate network expansion. It also shows that the implied price-cost margins are significantly high. Thus, price liberalization could be conducive to development of the telecommunications network led by the private sector. Some countries in Africa are still imposing certain price restrictions. But more important, it remains a policy issue how the authorities should ensure reciprocal access between operators at reasonable cost.
format	Publications & Research :: Policy Research Working Paper
author	Iimi, Atsushi
author_facet	Iimi, Atsushi
author_sort	Iimi, Atsushi
title	Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa
title_short	Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa
title_full	Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa
title_fullStr	Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa
title_full_unstemmed	Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa
title_sort	price structure and network externalities in the telecommunications industry : evidence from sub-saharan africa
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2007/04/7537662/price-structure-network-externalities-telecommunications-industry-evidence-sub-saharan-africa http://hdl.handle.net/10986/7020
_version_	1764401761644183552

Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa

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