Competition Reform and Household Welfare: A Microsimulation Analysis of the Telecommunication Sector in Ethiopia

Arbeitspapier

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 for 2015/16 for Ethiopia and assuming a reform scenario that dilutes the market share of the 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. This reform would generate a welfare gain of 1.37 percent among all consumers. Poverty rates are expected to decline by 0.31 percentage points, driven by a reduction of 0.22 percentage points for current consumers and 0.09 percentage points among new users. Inequality would increase by 0.23 Gini points 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 14044

Classification and Topics

• Classification: Wirtschaft ; Statistical Simulation Methods: General ; Market Structure, Pricing, and Design: General ; Welfare Economics: General ; Measurement and Analysis of Poverty ; Information and Internet Services; Computer Software ; Economic History: Transport, Trade, Energy, Technology, and Other Services: Africa; Oceania
• Subject: competition reform ; ICT ; welfare effects ; simulations ; Ethiopia

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rodriguez Castelan, Carlos ; Araar, Abdelkrim ; Malásquez, Eduardo A. ; Ochoa, Rogelio Granguillhome
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/232796
• Last update: 10.03.2025, 11:45 AM CET