Pro-Competition Public Policy in Network Markets with Switching Costs: Evidence from "Mobile Number Portability" in Wireless Telecommunications Industry
نویسندگان
چکیده
Does public policy designed to promote market competition indeed achieve the intended consequence? Using the wireless industry as a testing field, this paper examines this question by focusing on the impact of mobile number portability (MNP) regulation on competition. We first construct a switching-costs model in which market growth rate and initial market structure are two salient industry characteristics. Guided by the analytical predictions, we analyze quarterly panel data of 218 major wireless operators in 52 countries from 2003-2009. We find relative market share gains for small firms under MNP, especially in markets with higher growth rate and lower concentration. Yet, surprisingly, large firms still manage to enjoy greater profit after MNP. We interpret the conundrum of “market share convergence” and “profit divergence” with customer base composition. Our method of analyzing asymmetric MNP effect in a cross-country context is applicable to public policy analysis in other industries.
منابع مشابه
Price Competition with Reduced Consumer Switching Costs: The Case of "Wireless Number Portability" in the Cellular Phone Industry
In this paper we study how a reduction of consumer switching costs may affect market competition in the wireless telecommunication industry. The reduction of switching costs can be achieved through the implementation of a regulatory policy called Wireless Number Portability (WNP) that allows consumers to retain the same phone numbers when they switch service providers. By r educing consumers' s...
متن کاملMobile price structures : two sides of the market
I hope you enjoy our seventh Vodafone Policy Paper. Our aim in these papers is to provide a platform for leading experts to write on issues in public policy that are important to us at Vodafone. These are the people that we listen to, even if we do not always agree with them. These are their views, not ours. We think that they have important things to say that should be of interest to anybody c...
متن کاملCoordination and Lock-In: Competition with Switching Costs
Switching costs and network e ects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in e ciency, and gives vendors lucrative ex post market power|over the same buyer in the case of switching costs (or brand loyalty), or over others...
متن کاملDo Switching Costs Make Markets More or Less Competitive?: The Case of 800-Number Portability
Do switching costs reduce or intensify price competition in markets where firms charge the same price to old and new consumers? The answer is theoretically ambiguous because a firm prefers to charge a higher price to previous purchasers who are “locked-in” and a lower price to unattached consumers who offer higher future profitability. 800-number portability provides empirical evidence to deter...
متن کاملThe Influence of Agency Costs on Dividend Policy in an Emerging Market: Evidence from the Tehran Stock Exchange
Dividend policy has long been an issue of interest in the financial literature. To date, a number of studies published on agency costs and dividend policy but most of them are on developed markets, It is well known that the emerging markets are quite different from developed markets in all respects. So, the existing published evidence is of limited relevance in identifying the influence of agen...
متن کامل