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Me and you and everyone we know: an empirical analysis of local network effects in mobile communications

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Author Info

  • Nicoletta Corrocher

    ()
    (CESPRI, Bocconi University, Milan, Italy.)

  • Lorenzo Zirulia

    ()
    (University of Bologna, CESPRI, Bocconi University, Milan and The Rimini Centre for Economic Analysis, Rimini, Italy.)

Abstract

This paper aims at investigating the importance that consumers assign to local network effects (i.e. the extent to which they take into account their contacts’ operators in determining their choices) and at identifying which individual characteristics affect consumers’ preferences in relation to local network effects. Based on a sample of 193 Italian students, we find that consumers are highly heterogeneous with respect to the evaluation of the importance of their friend/family’s operator when choosing their own provider, and that such heterogeneity is associated to specific characteristics related to individual innovativeness and patterns of mobile phone usage. In particular, consumers who are more interested in local network effects are typically sophisticated users, who use intensively voice services and who are early adopters. Interestingly, consumers who pay attention to local network effects end up spending relatively little in proportion to their intensity of use.

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Bibliographic Info

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 03-08.

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Date of creation: Jan 2008
Date of revision: Jan 2008
Handle: RePEc:rim:rimwps:03-08

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Cited by:
  1. repec:lmu:msmdpa:13764 is not listed on IDEAS
  2. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-Mediated Network Effects versus Strategic Discounting: Evidence from German Mobile Telecommunications," Discussion Papers in Business Administration 14848, University of Munich, Munich School of Management.
  3. repec:lmu:msmdpa:12688 is not listed on IDEAS
  4. Muck, Johannes, 2013. "The Effect of On-net/Off-net Differentiation and Heterogeneous Consumers on Network Size in Mobile Telecommunications An Agent-based Approach," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79856, Verein für Socialpolitik / German Economic Association.
  5. Liangjie Zhao & Wenqi Duan, 2014. "Simulating the Evolution of Market Shares: The Effects of Customer Learning and Local Network Externalities," Computational Economics, Society for Computational Economics, vol. 43(1), pages 53-70, January.
  6. 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).
  7. Muck, Johannes, 2012. "The effect of on-net / off-net differentiation and heterogeneuous consumers on network size in mobile telecommunications : an agent-based aporoach," 23rd European Regional ITS Conference, Vienna 2012 60355, International Telecommunications Society (ITS).

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