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The distribution of value in the mobile phone supply chain

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Author Info

  • Dedrick, Jason
  • Kraemer, Kenneth L.
  • Linden, Greg
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    Abstract

    The supply chains of the mobile phone industry span national and firm boundaries. To analyze how value is distributed among the participants, a framework based on theories of firm strategy is applied, and a novel methodology is used to measure value capture in three phone models introduced from 2004 to 2008. The research shows that carriers capture the greatest value (in terms of gross profit) from each handset, followed closely by handset makers, with suppliers a distant third. However, the situation is reversed in terms of operating profit. Carriers shoulder the burden of network installation, maintenance, and upgrading, which absorbs much of the value from their subscription fees. Handset maker nationality, which may also influence supplier choice, is a key determinant of the geographic distribution of value capture. The results are also used to estimate the relationship of handset subsidies to carrier profits, which has been an issue of concern for antitrust authorities in several countries. The analysis shows how the framework can be used to calculate how much service charges might be inflated to cover the subsidies.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0308596111000619
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    Bibliographic Info

    Article provided by Elsevier in its journal Telecommunications Policy.

    Volume (Year): 35 (2011)
    Issue (Month): 6 (July)
    Pages: 505-521

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    Handle: RePEc:eee:telpol:v:35:y:2011:i:6:p:505-521

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    Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description

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    Related research

    Keywords: Mobile phone industry Supply chain Financial value capture Phone subsidies Balance of power Value of innovation;

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    Cited by:
    1. Joonkoo Lee & Gary Gereffi, 2013. "The co-evolution of concentration in mobile phone global value chains and its impact on social upgrading in developing countries," Brooks World Poverty Institute Working Paper Series ctg-2013-25, BWPI, The University of Manchester.
    2. Covadonga Gijón Tascón & Teresa Garín-Muñoz, & Teodosio Pérez-Amaral, 2012. "Satisfaction and protection of individual mobile telecommunications consumers," Documentos del Instituto Complutense de Análisis Económico 2012-21, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.

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