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Termination-discriminatory pricing, subscriber bandwagons, and network traffic patterns: the Taiwanese mobile phone market

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  • Fu, W. Wayne
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    Abstract

    This article studies network effects induced by termination-based price discrimination in the evolving Taiwan mobile phone market. An econometric model that estimates the effects attests to the formation of bandwagon behavior among network subscribers. It is shown that networks with a large subscriber base will recruit a disproportionately greater share of new users ceteris paribus compared with low-penetration operators. The strength of the subscriber bandwagon varies closely with the price differential of intra- and inter-network calls. Also, analysis of network traffic reveals that an average mobile phone user consumes considerably less inter-network than intra-network airtime; consequently, mobile phone use is largely clustered within respective networks and hindered from traversing others.

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    Bibliographic Info

    Article provided by Elsevier in its journal Telecommunications Policy.

    Volume (Year): 28 (2004)
    Issue (Month): 1 (February)
    Pages: 5-22

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    Handle: RePEc:eee:telpol:v:28:y:2004:i:1:p:5-22

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    Keywords: Mobile networks Termination Bandwagon effects Taiwan;

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    Cited by:
    1. Michal Grajek, 2007. "Estimating network effects and compatibility in mobile telecommunications," ESMT Research Working Papers ESMT-07-001, ESMT European School of Management and Technology.
    2. Bölcskei, Vanda, 2010. "A távbeszélő-szolgáltatások keresleti modelljeinek áttekintése - különös tekintettel a vezetékes és mobilszolgáltatások közötti helyettesítés becslésére
      [A review of the demand
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 517-535.
    3. Iimi, Atsushi, 2007. "Price structure and network externalities in the telecommunications industry : evidence from Sub-Saharan Africa," Policy Research Working Paper Series 4200, The World Bank.
    4. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-mediated network effects versus strategic discounting: Evidence from German mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 751-759.
    5. Srinuan, Chalita & Srinuan, Pratompong & Bohlin, Erik, 2012. "Exploring mobile pricing strategies and innovations in the Thai mobile communications market," 19th ITS Biennial Conference, Bangkok 2012: Moving Forward with Future Technologies - Opening a Platform for All 72522, International Telecommunications Society (ITS).
    6. Chen-Ju Lin & Ci-Rong Li & Chih-Peng Chu, 2011. "The effects of applying a hybrid method with a macro–micro approach for market research in the telecommunication industry," Quality & Quantity: International Journal of Methodology, Springer, vol. 45(4), pages 829-843, June.
    7. Grajek, Michal, 2010. "Estimating network effects and compatibility: Evidence from the Polish mobile market," Information Economics and Policy, Elsevier, vol. 22(2), pages 130-143, May.
    8. repec:lmu:msmdpa:12688 is not listed on IDEAS
    9. Karaçuka, Mehmet & Çatik, A. Nazif & Haucap, Justus, 2012. "Consumer choice and local network effects in mobile telecommunications in Turkey," DICE Discussion Papers 70, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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