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Assessment of First Comer Advantages and Network Effects; the Case of Turkish GSM Market

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  • Tözer, Ayhan

Abstract

First comer advantages and network effects are frequently stated as among the most important determinants of market structures and this is particularly relevant for network economies including telecommunications markets. Connected to this, regulatory tools such as number portability have frequently been used to reduce market imperfections resulting from these effects. Within this context, this paper aims to analyze the role of these factors in creating the current market structure of Turkish GSM sector. By examining relevant data such as development of market shares in a historical perspective and by making use of consumer surveys, it is concluded that the dominant operator has benefited from being first comer in the market and established a stable market share (power) due to network effects that are used by this firm deliberately to entrench its position especially in the form of switching costs, scale economies, brand image and tariff (on-net vs. off-net pricing) differentiation; however, it is also observed that introduction of number portability lead to reduction in switching costs, increasing market competition.

Suggested Citation

  • Tözer, Ayhan, 2010. "Assessment of First Comer Advantages and Network Effects; the Case of Turkish GSM Market," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 35, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itse10:35
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    References listed on IDEAS

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    1. Buehler, Stefan & Dewenter, Ralf & Haucap, Justus, 2006. "Mobile number portability in Europe," Telecommunications Policy, Elsevier, vol. 30(7), pages 385-399, August.
    2. Stefan Buehler & Justus Haucap, 2004. "Mobile Number Portability," Journal of Industry, Competition and Trade, Springer, vol. 4(3), pages 223-238, September.
    3. Gans, Joshua S. & King, Stephen P., 2000. "Mobile network competition, customer ignorance and fixed-to-mobile call prices," Information Economics and Policy, Elsevier, vol. 12(4), pages 301-327, December.
    4. Daniel Birke & G. Swann, 2006. "Network effects and the choice of mobile phone operator," Journal of Evolutionary Economics, Springer, vol. 16(1), pages 65-84, April.
    5. Daniel Birke & G. M. Peter Swann, 2005. "Social networks and choice of mobile phone operator," Occasional Papers 14, Industrial Economics Division.
    6. V. Brian Viard, 2007. "Do switching costs make markets more or less competitive? The case of 800-number portability," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 146-163, March.
    7. Bijwaard, Govert E. & Janssen, Maarten C.W. & Maasland, Emiel, 0. "Early mover advantages: An empirical analysis of European mobile phone markets," Telecommunications Policy, Elsevier, vol. 32(3-4), pages 246-261, April.
    8. Franco Malerba & Uwe Cantner, 2006. "Innovation, industrial dynamics and structural transformation: Schumpeterian legacies," Journal of Evolutionary Economics, Springer, vol. 16(1), pages 1-2, April.
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