Estimating Network Effects and Compatibility in Mobile Telecommunications

Arbeitspapier

I develop a structural demand model for mobile telephone service, which facilitates the identification of network effects and compatibility between networks. Network effects are measured by the dependence of consumer willingness to pay on the installed base of subscribers. Compatibility is measured by the relative extent of cross- and own-network effects. I then estimate the model using quarterly panel data from the Polish mobile telephone industry from 1996-2001 and find strong network effects and - despite full interconnection of the mobile telephone networks - low compatibility. I also show that ignoring network effects leads to an overestimation of elasticity of demand.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ESMT Working Paper ; No. 07-001

Classification and Topics

• Classification: Management ; Model Construction and Estimation ; Consumer Economics: Empirical Analysis ; Telecommunications
• Subject: Structural Econometric Model ; Network Effects ; Compatibility ; Mobile Telecommunications

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grajek, Michał
• Event: Veröffentlichung
• (who): European School of Management and Technology (ESMT)
• (where): Berlin
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/96552
• URN: urn:nbn:de:101:1-201106143391
• Last update: 10.03.2025, 11:42 AM CET