{"title":"Competition in network industries: Evidence from the Rwandan mobile phone network.","authors":"Daniel Björkegren","doi":"10.1111/1756-2171.12405","DOIUrl":null,"url":null,"abstract":"<p><p>This article analyzes the potential for competition policy to affect welfare and investment in a network industry. When a network is split between competitors, each internalizes less network effects, but may still invest to steal customers. I structurally estimate consumers' utility from adopting and using mobile phones, with transaction data from nearly the entire Rwandan network. I simulate the equilibrium choices of consumers and network operators. Adding a competitor earlier could have reduced prices and increased incentives to invest in rural towers, increasing welfare by the equivalent of 1% of GDP. However, forcing free interconnection can lower incentives to invest.</p>","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.8000,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10438865/pdf/nihms-1854206.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Rand Journal of Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1111/1756-2171.12405","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This article analyzes the potential for competition policy to affect welfare and investment in a network industry. When a network is split between competitors, each internalizes less network effects, but may still invest to steal customers. I structurally estimate consumers' utility from adopting and using mobile phones, with transaction data from nearly the entire Rwandan network. I simulate the equilibrium choices of consumers and network operators. Adding a competitor earlier could have reduced prices and increased incentives to invest in rural towers, increasing welfare by the equivalent of 1% of GDP. However, forcing free interconnection can lower incentives to invest.
期刊介绍:
The RAND Journal of Economics publishes theoretical and empirical research on industrial organization and closely related topics, including contracts, organizations, law and economics, and regulation. The RAND Journal of Economics, formerly the Bell Journal of Economics, is published quarterly by The RAND Corporation, in conjunction with Blackwell Publishing.