Competition Reform and Household Welfare
This paper presents a novel method for estimating the likely welfare effects of competition reforms for both current and new consumers. Using household budget survey data from 2015/16 for Ethiopia and assuming a reform scenario that dilutes the market share of the telecommunications state-owned monopoly to 45 percent, the model predicts a 25.3 percent reduction in the price of mobile services and an increase of 4.6 million new users of mobile phone services. This reform is expected to generate a welfare gain of 1.37 percent among all consumers. Poverty rates are expected to decline by 0.31 percentage point, driven by a reduction of 0.22 percentage point for current consumers and 0.09 percentage point among new users. Inequality would increase by 0.23 Gini point since better-off consumers are more likely to reap the benefits of greater competition. This method represents a powerful tool for supporting the analysis of competition reforms in developing countries, particularly in sectors known for excluding significant segments of the population due to high consumer prices.
| Main Authors: | , , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021-01
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| Subjects: | COMPETITION REFORM, WELFARE EFFECTS, SIMULATIONS, INFORMATION AND COMMUNICATION TECHNOLOGY, POVERTY REDUCTION, SHARED PROSPERITY, CONSUMPTION, STATE-OWNED ENTERPRISES, TELECOMMUNICATIONS, |
| Online Access: | http://documents.worldbank.org/curated/en/959881611167650082/Competition-Reform-and-Household-Welfare-A-Microsimulation-Analysis-of-the-Telecommunication-Sector-in-Ethiopia https://hdl.handle.net/10986/35030 |
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