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Benefits of Regulation vs. Competition Where Inequality Is High: The Case of Mobile Telephony in South Africa

Author

Listed:
  • Ryan Hawthorne
  • Lukasz Grzybowski

Abstract

We test for the distributional effects of regulation and entry in the mobile telecommunications sector in a highly unequal country, South Africa. Using six waves of a consumer survey of over 134,000 individuals between 2009-2014, we estimate a discrete-choice model allowing for individual-specific price-responsiveness and preferences for network operators. Next, we use a demand and supply equilibrium framework to simulate prices and the distribution of welfare without entry and mobile termination rate regulation. We find that regulation benefits consumers significantly more than entry does, and that high-income consumers and city-dwellers benefit more in terms of increased consumer surplus.

Suggested Citation

  • Ryan Hawthorne & Lukasz Grzybowski, 2019. "Benefits of Regulation vs. Competition Where Inequality Is High: The Case of Mobile Telephony in South Africa," CESifo Working Paper Series 7703, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_7703
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp7703.pdf
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    References listed on IDEAS

    as
    1. Onkokame Mothobi, 2017. "The Impact of Telecommunication Regulatory Policy on Mobile Retail Price in Sub-Saharan African Countries," Working Papers 662, Economic Research Southern Africa.
    2. Klonner, Stefan & Nolen, Patrick J., 2010. "Cell Phones and Rural Labor Markets: Evidence from South Africa," Proceedings of the German Development Economics Conference, Hannover 2010 56, Verein für Socialpolitik, Research Committee Development Economics.
    3. Pereira, Pedro & Ribeiro, Tiago, 2011. "The impact on broadband access to the Internet of the dual ownership of telephone and cable networks," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 283-293, March.
    4. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    5. Argent,Jonathan Thompson & Begazo Gomez,Tania Priscilla, 2015. "Competition in Kenyan markets and its impact on income and poverty : a case study on sugar and maize," Policy Research Working Paper Series 7179, The World Bank.
    6. Jenny C. Aker, 2010. "Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 46-59, July.
    7. Harald Gruber & Pantelis Koutroumpis, 2011. "Mobile telecommunications and the impact on economic development," Economic Policy, CEPR;CES;MSH, vol. 26(67), pages 387-426, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    mobile telecommunications; competition; entry; discrete choice; inequality;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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