Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa
Many developing countries have experienced significant developments in their telecommunications network. Countries in Africa are no exception to this. The paper examines what factor facilitates most network expansion using micro data from 45 fixed-line and mobile telephone operators in 18 African countries. In theory the telecommunications sector has two sector-specific characteristics: network externalities and discriminatory pricing. It finds that many telephone operators in the region use peak and off-peak prices and termination-based price discrimination, but are less likely to rely on strategic fee schedules such as tie-in arrangements. The estimated demand function based on a discreet consumer choice model indicates that termination-based discriminatory pricing can facilitate network expansion. It also shows that the implied price-cost margins are significantly high. Thus, price liberalization could be conducive to development of the telecommunications network led by the private sector. Some countries in Africa are still imposing certain price restrictions. But more important, it remains a policy issue how the authorities should ensure reciprocal access between operators at reasonable cost.
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dig-okr-1098670202024-08-08T16:59:59Z Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa Iimi, Atsushi ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION Many developing countries have experienced significant developments in their telecommunications network. Countries in Africa are no exception to this. The paper examines what factor facilitates most network expansion using micro data from 45 fixed-line and mobile telephone operators in 18 African countries. In theory the telecommunications sector has two sector-specific characteristics: network externalities and discriminatory pricing. It finds that many telephone operators in the region use peak and off-peak prices and termination-based price discrimination, but are less likely to rely on strategic fee schedules such as tie-in arrangements. The estimated demand function based on a discreet consumer choice model indicates that termination-based discriminatory pricing can facilitate network expansion. It also shows that the implied price-cost margins are significantly high. Thus, price liberalization could be conducive to development of the telecommunications network led by the private sector. Some countries in Africa are still imposing certain price restrictions. But more important, it remains a policy issue how the authorities should ensure reciprocal access between operators at reasonable cost. 2012-06-04T18:15:29Z 2012-06-04T18:15:29Z 2007-04 http://documents.worldbank.org/curated/en/2007/04/7537662/price-structure-network-externalities-telecommunications-industry-evidence-sub-saharan-africa https://hdl.handle.net/10986/7020 English Policy Research Working Paper; No. 4200 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain World Bank, Washington, DC |
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Biblioteca del Banco Mundial |
| language |
English |
| topic |
ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION |
| spellingShingle |
ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION Iimi, Atsushi Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa |
| description |
Many developing countries have
experienced significant developments in their
telecommunications network. Countries in Africa are no
exception to this. The paper examines what factor
facilitates most network expansion using micro data from 45
fixed-line and mobile telephone operators in 18 African
countries. In theory the telecommunications sector has two
sector-specific characteristics: network externalities and
discriminatory pricing. It finds that many telephone
operators in the region use peak and off-peak prices and
termination-based price discrimination, but are less likely
to rely on strategic fee schedules such as tie-in
arrangements. The estimated demand function based on a
discreet consumer choice model indicates that
termination-based discriminatory pricing can facilitate
network expansion. It also shows that the implied price-cost
margins are significantly high. Thus, price liberalization
could be conducive to development of the telecommunications
network led by the private sector. Some countries in Africa
are still imposing certain price restrictions. But more
important, it remains a policy issue how the authorities
should ensure reciprocal access between operators at
reasonable cost. |
| topic_facet |
ADVERTISING BRAND CALLS CAPITAL COSTS CELLULAR PHONE CONSUMER CHOICE CONSUMERS CORRELATION ANALYSIS DECISION MAKING DECISION TREE DEMAND FUNCTION ECONOMIC EFFICIENCY ECONOMIES OF SCALE ELECTRIC POWER EMPIRICAL ANALYSIS ENDOGENOUS VARIABLES EQUILIBRIUM PRICE EXPENDITURE EXTERNALITY FIXED COSTS FIXED COSTS OF PRODUCTION GDP GDP PER CAPITA GROWTH RATE INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE SECTORS INFRASTRUCTURE SERVICES MARGINAL COST MARKET PRICES MARKET SHARE MARKET STRUCTURE MOBILE COSTS MOBILE NETWORKS MONOPOLY NATIONAL INCOME NETWORK EXTERNALITIES NETWORK EXTERNALITY PRICE COMPETITION PRICE CONTROL PRICE DISCRIMINATION PRICE LIBERALIZATION PRICE MECHANISMS PRICE REGULATION PRICE SCHEDULE PRICE SCHEDULES PRICE STRUCTURE PRICING MECHANISMS PRICING MODEL PRICING POLICIES PRICING POLICY PRICING SCHEME PRIVATE SECTOR PRIVATIZATION PRODUCTION COSTS PURCHASING RATE DESIGN REGULATORY AGENCIES REGULATORY PRACTICES RETAIL RETAIL PRICES ROADS SUB-SAHARAN AFRICA SUBSCRIBERS SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUPPLIER SUPPLY EQUATION SURPLUS TELECOMMUNICATIONS TELECOMMUNICATIONS DEVELOPMENT TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS MARKETS TELECOMMUNICATIONS REFORMS TELECOMMUNICATIONS SERVICES TELECOMMUNICATIONS TECHNOLOGY TELEPHONE COMPANIES TELEPHONE PENETRATION TELEPHONE SERVICE TELEPHONE SERVICES TRAFFIC UNBUNDLING UNIT COST UTILITY FUNCTION WATER SANITATION |
| author |
Iimi, Atsushi |
| author_facet |
Iimi, Atsushi |
| author_sort |
Iimi, Atsushi |
| title |
Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa |
| title_short |
Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa |
| title_full |
Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa |
| title_fullStr |
Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa |
| title_full_unstemmed |
Price Structure and Network Externalities in the Telecommunications Industry : Evidence from Sub-Saharan Africa |
| title_sort |
price structure and network externalities in the telecommunications industry : evidence from sub-saharan africa |
| publisher |
World Bank, Washington, DC |
| publishDate |
2007-04 |
| url |
http://documents.worldbank.org/curated/en/2007/04/7537662/price-structure-network-externalities-telecommunications-industry-evidence-sub-saharan-africa https://hdl.handle.net/10986/7020 |
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AT iimiatsushi pricestructureandnetworkexternalitiesinthetelecommunicationsindustryevidencefromsubsaharanafrica |
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1807154279612416000 |