Measuring network effects in mobile telecommunications markets with stated-preference valuation methods
AbstractThis paper demonstrates how stated-preference methods can be applied for modelling consumers' preferences in mobile telecommunications, and for measuring network effects. This will be illustrated with a case study of mobile phone operators in Poland. A random parameters multinomial logit model will be constructed to analyse consumer preferences. This approach allows calculating welfare effects, as well as marginal rates of substitution of the attributes used to describe the choices, such as operator brand and distribution of family and friends among available mobile networks. The results confirm the existence of a strong network effect, which is related to the size of the social network a particular subscriber belongs to, rather than the absolute size of the mobile operator's customer base. In addition, brand perception and brand loyalty will be identified as important determinants of operator choice. Finally, through the application of a non-market valuation method, monetary values of the network effect and of brand loyalty, will be calculated.
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Bibliographic InfoArticle provided by Inderscience Enterprises Ltd in its journal Int. J. of Management and Network Economics.
Volume (Year): 2 (2011)
Issue (Month): 2 ()
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Web page: http://www.inderscience.com/browse/index.php?journalID==259
network effects; mobile telecommunications; brand valuation; stated preference methods; non-market valuation methods; choice experiment; multinomial conditional logit model; preference heterogeneity; random parameter models; Poland; mobile communications; consumer preferences.;
Other versions of this item:
- Czajkowski, Mikolaj & Sobolewski, Maciej, 2010. "Measuring Network Effects in Mobile Telecommunications Markets with Stated‐Preference Valuation Methods," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 5, International Telecommunications Society (ITS).
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
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