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Entry, standards and competition : firm strategies and the diffusion of mobile telephony

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  • Koski, Heli
  • Kretschmer, Tobias

Abstract

This paper studies the effects of a country’s regulatory setting and competitive environment on the performance of second-generation (2G) mobile telecommunication. We consider three dimensions of sector performance: entry time, service prices and diffusion. We address the question of non-random selection arising from cross-country differences in the timing of the commercialization of new technologies. Our empirical exploration shows that this type of sample selection may indeed be a substantial problem in cross-country studies on technology diffusion and yield biased estimates of the policy variables of interest. Our estimation results suggest that standardization accelerates 2G entry and diffusion, although within-standards competition triggers less aggressive price competition than between-standards competition. We also find that an early monopolist will price more aggressively to build up an installed base. Furthermore, we find that liberalizing markets for incumbent technologies (i.e. fixed line telephony) has accelerated the commercialization of 2G.

Suggested Citation

  • Koski, Heli & Kretschmer, Tobias, 2005. "Entry, standards and competition : firm strategies and the diffusion of mobile telephony," LSE Research Online Documents on Economics 801, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:801
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    References listed on IDEAS

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    More about this item

    Keywords

    Competition; standardization; diffusion; pricing; mobile telephony. JEL classification codes: L1; L52; O38;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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