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

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  • Creti Anna

    () (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 unit 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.

Suggested Citation

  • Creti Anna, 2007. "Telecommunications Services and Multi-Unit Firms: Inside the Black-Box," Review of Network Economics, De Gruyter, vol. 6(1), pages 1-28, March.
  • Handle: RePEc:bpj:rneart:v:6:y:2007:i:1:n:4
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    References listed on IDEAS

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    1. Timothy H. Hannan & Elizabeth K. Kiser & Robin A. Prager & James J. McAndrews, 2003. "To Surcharge or Not to Surcharge: An Empirical Investigation of ATM Pricing," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 990-1002, November.
    2. Gautam Gowrisankaran & John Krainer, 2004. "The Welfare Consequences of ATM Surcharges: Evidence from a Structural Entry Model," Working Papers 04-16, NET Institute, revised Nov 2004.
    3. Knittel Christopher R. & Stango Victor, 2008. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-42.
    4. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    5. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
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