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An Analysis of the Mobile Telephone Sector in MENA: Potential for Deregulation and Privatization

Listed author(s):
  • Sam Hakim

    ()

    (Pepperdine University, USA.)

  • Simon Neaime

This study evaluates the growth and trend in the mobile telephone sector in several MENA countries between 1995 and 2007. We find that the magnitude of demand elasticities do not entice collusive behavior between service providers because the effect of price reductions is neutral on total revenues; we also find that the cost of service and administrative corruption have a strong negative effect on mobile penetration, which, surprisingly, is higher in countries with more unequal income distribution. With respect to the degree and scope of liberalization of the mobile sector, we find that the direction of deregulation is accelerated in countries with a high proportion of investment, where the sector generates high revenues, and where civil society is generally free from government interference. At the same time, the liberalization is slowed in countries characterized by a high-income inequality and average cost of service. The study discusses how market reforms in developed countries fail to translate to developing countries because several negative externalities are often overlooked. We identify several factors that should be considered for liberalization to succeed and explain how to design a strategic path for reforms in the mobile sector.

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Paper provided by Economic Research Forum in its series Working Papers with number 649.

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Length: 28
Date of creation: 12 Jan 2011
Date of revision: 12 Jan 2011
Publication status: Published by The Economic Research Forum (ERF)
Handle: RePEc:erg:wpaper:649
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  1. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
  2. Gruber, Harald & Verboven, Frank, 2001. "The diffusion of mobile telecommunications services in the European Union," European Economic Review, Elsevier, vol. 45(3), pages 577-588, March.
  3. Armstrong, Mark, 1997. "Competition in Telecommunications," Oxford Review of Economic Policy, Oxford University Press, vol. 13(1), pages 64-82, Spring.
  4. Carlo Maria Rossotto & Khalid Sekkat & Aristomene Varoudakis, 2005. "Opening up telecommunications to competition and MENA integration in the world economy," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(7), pages 931-955.
  5. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
  6. Veiseh, Nima, 2010. "Reconciling Acemoglu and Sachs: geography, institutions and technology," MPRA Paper 33574, University Library of Munich, Germany.
  7. Ros, Agustin J, 1999. "Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency," Journal of Regulatory Economics, Springer, vol. 15(1), pages 65-92, January.
  8. Dewenter, Ralf & Haucap, Justus, 2004. "Estimating Demand Elasticities for Mobile Telecommunications in Austria," Working Paper 33/2004, Helmut Schmidt University, Hamburg.
  9. Forcina, A. & Dardanoni, V., 2008. "Regression models for multivariate ordered responses via the Plackett distribution," Journal of Multivariate Analysis, Elsevier, vol. 99(10), pages 2472-2478, November.
  10. Daron Acemoglu, 2006. "A Simple Model of Inefficient Institutions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 515-546, December.
  11. Wallsten, Scott J, 2001. "An Econometric Analysis of Telecom Competition, Privatization, and Regulation in Africa and Latin America," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 1-19, March.
  12. Pranab Bardhan & Dilip Mookherjee, 2006. "Decentralisation and Accountability in Infrastructure Delivery in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(508), pages 101-127, 01.
  13. Tommaso Valletti, 2003. "Is Mobile Telephony a Natural Oligopoly?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(1), pages 47-65, February.
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