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The evolution of markets under entry and standards regulation -- the case of global mobile telecommunications

  • Gruber, Harald
  • Verboven, Frank

We analyse the effects of government policies, such as entry regulation and standard setting, on the evolution of an industry, the global mobile telecommunications markets during 1981-1997. Among other results, we find that countries that issue first licenses at later dates converge rather slowly and only partially, compared to early-moving countries. We find that introducing competition has a strong immediate impact on the diffusion rate, but a rather weak impact afterwards. Sequential entry is preceded by pre-emptive behaviour. These findings are consistent with the presence of consumer switching costs. Concerning standards, we find that setting a standard has a significant positive impact on diffusion for the analogue technology, but not for the digital technology. This suggests that the network advantages from having a single standard are offset by the benefits derived from the battle for developing more efficient digital systems.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 19 (2001)
Issue (Month): 7 (July)
Pages: 1189-1212

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Handle: RePEc:eee:indorg:v:19:y:2001:i:7:p:1189-1212
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  1. Geroski, Paul A, 1999. "Models of Technology Diffusion," CEPR Discussion Papers 2146, C.E.P.R. Discussion Papers.
  2. Laura D'Andrea Tyson, 1992. "Who's Bashing Whom? Trade Conflict in High-Technology Industries," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 86.
  3. Valletti, Tommaso M & Cave, Martin, 1998. "Competition in UK mobile communications," Telecommunications Policy, Elsevier, vol. 22(2), pages 109-131, March.
  4. Jerry A. Hausman, 1997. "Valuing the Effect of Regulation on New Services in Telecommunications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1997 Micr), pages 1-54.
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