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Telecommunications Services and Multi-Unit Firms: Inside the Black-Box

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Author Info
Anna Creti () (Department of Economics and IEFE, Universita' Luigi Bocconi)
Abstract

This paper analyzes telecommunications demand by firms, focusing on communication flows among production units. We consider first the case of two business units, that can play simultaneously or in a leader/follower situation regarding their communication decisions. In this context, we define the network effect as the advantage a production unit obtains by using an input whose costs are shared by another user. The model is then generalized, taking into account indirect links among production units. The theoretical framework we suggest explains business telecommunications usage by multi-unit firms, and sheds light on the relationship between firms' internal organisation and communication flows.

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Publisher Info
Article provided by Concept Economics in its journal Review of Network Economics.

Volume (Year): 6 (2007)
Issue (Month): 1 (March)
Pages: 50-77
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Handle: RePEc:rne:rneart:v:6:y:2007:i:1:p:50-77

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Related research
Keywords: Telecommunications; business demand; internal organization;

References listed on IDEAS
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  1. Jeffrey Rohlfs, 1974. "A Theory of Interdependent Demand for a Communications Service," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 16-37, Spring. [Downloadable!] (restricted)
  2. Bolton, Patrick & Dewatripont, Mathias, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 809-39, November. [Downloadable!] (restricted)
  3. Bhaskar Dutta & Suresh Mutuswami, 1997. "Stable Networks," Tinbergen Institute Discussion Papers 97-039/1, Tinbergen Institute.
    Other versions:
  4. Odlyzko, Andrew, 2000. "The Internet and other networks: utilization rates and their implications," Information Economics and Policy, Elsevier, vol. 12(4), pages 341-365, December. [Downloadable!] (restricted)
  5. Roland Artle & Christian Averous, 1973. "The Telephone System as a Public Good: Static and Dynamic Aspects," Bell Journal of Economics, The RAND Corporation, vol. 4(1), pages 89-100, Spring. [Downloadable!] (restricted)
  6. Liebowitz, S J & Margolis, Stephen E, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-50, Spring. [Downloadable!] (restricted)
  7. Massimiliano Marinucci & Teodosio Pérez-Amaral, 2005. "Econometric Modeling of Business Telecommunications Demand using RETINA and Finite Mixtures," Econometrics 0505003, EconWPA, revised 14 May 2005. [Downloadable!]
  8. Gal-Or, Esther, 1993. "Strategic Cost Allocation," Journal of Industrial Economics, Blackwell Publishing, vol. 41(4), pages 387-402, December. [Downloadable!] (restricted)
  9. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June. [Downloadable!] (restricted)
  10. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August. [Downloadable!] (restricted)
  11. Delmastro, Marco, 2002. "The determinants of the management hierarchy: evidence from Italian plants," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 119-137, January. [Downloadable!] (restricted)
  12. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October. [Downloadable!] (restricted)
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  13. Lyn Squire, 1973. "Some Aspects of Optimal Pricing for Telecommunications," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 515-525, Autumn. [Downloadable!] (restricted)
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