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Network effects, network structure and consumer interaction in mobile telecommunications in Europe and Asia

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  • Birke, Daniel
  • Swann, G.M. Peter

Abstract

This paper estimates the importance of (tariff-mediated) network effects and the impact of a consumer's social network on her choice of mobile phone provider. The study uses network data obtained from surveys of students in several European and Asian countries. We use the Quadratic Assignment Procedure, a non-parametric permutation test, to adjust for the particular error structure of network data. We find that respondents strongly coordinate their choice of mobile phone providers, but only if their provider induces network effects. This suggests that this coordination depends on network effects rather than on information contagion or pressure to conform to the social environment.

Suggested Citation

  • Birke, Daniel & Swann, G.M. Peter, 2010. "Network effects, network structure and consumer interaction in mobile telecommunications in Europe and Asia," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 153-167, November.
  • Handle: RePEc:eee:jeborg:v:76:y:2010:i:2:p:153-167
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    Cited by:

    1. Daniel Björkegren, 2017. "Scoping for: Competition in Network Industries: Evidence from Mobile Telecommunications in Rwanda," Working Papers 17-10, NET Institute.
    2. Harbord, David & Pagnozzi, Marco, 2008. "On-Net/Off-Net Price Discrimination and 'Bill-and-Keep' vs. 'Cost-Based' Regulation of Mobile Termination Rates," MPRA Paper 14540, University Library of Munich, Germany.
    3. repec:lmu:msmdpa:12688 is not listed on IDEAS
    4. repec:eee:iepoli:v:40:y:2017:i:c:p:71-79 is not listed on IDEAS
    5. Basaran, Alparslan A. & Cetinkaya, Murat & Bagdadioglu, Necmiddin, 2014. "Operator choice in the mobile telecommunications market: Evidence from Turkish urban population," Telecommunications Policy, Elsevier, vol. 38(1), pages 1-13.
    6. Karacuka, Mehmet & Çatık, A. Nazif & Haucap, Justus, 2013. "Consumer choice and local network effects in mobile telecommunications in Turkey," Telecommunications Policy, Elsevier, pages 334-344.
    7. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-mediated network effects versus strategic discounting: Evidence from German mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 751-759.
    8. repec:lmu:msmdpa:13764 is not listed on IDEAS

    More about this item

    Keywords

    Network effects Social networks Mobile telecommunications QAP;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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