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Estimating Network Effects and Compatibility in Mobile Telecommunications Author info | Abstract | Publisher info | Download info | Related research | Statistics Michal Grajek (ESMT European School of Management and Technology)
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I develop a structural demand model for mobile telephone service, which facilitates the identification of network effects and compatibility between networks. Network effects are measured by the dependence of consumer willingness to pay on the installed base of subscribers. Compatibility is measured by the relative extent of cross- and own-network effects. I then estimate the model using quarterly panel data from the Polish mobile telephone industry from 1996-2001 and find strong network effects and—despite full interconnection of the mobile telephone networks—low compatibility. I also show that ignoring network effects leads to an overestimation of elasticity of demand.
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Paper provided by ESMT European School of Management and Technology in its series ESMT Research Working Papers with number
ESMT-07-001.
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Length: 43 pages
Date of creation: 27 Sep 2007Date of revision:
Handle: RePEc:esm:wpaper:esmt-07-001Contact details of provider: Postal: Schlossplatz 1, 10178 Berlin Phone: +49 (0)30 21231 0 Fax: +49 (0)30 21231 9 Email: Web page: http://www.esmt.org More information through EDIRC
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Keywords: Structural Econometric Model ; Network Effects ; Compatibility ; Mobile Telecommunications ; Other versions of this item:
Find related papers by JEL classification: C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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