DP2440 The Evolution of Markets Under Entry and Standards Regulation - The Case of Global Mobile Telecommunications
|Author(s):||Harald Gruber, Frank Verboven|
|Publication Date:||April 2000|
|Keyword(s):||Capacity Constraints, Consumer Switching Costs, entry regulation, Mobile Telecommunications, Network Externalities, Pre-Emption, Standards And Competing Systems, Technology Diffusion|
|JEL(s):||L10, L86, O30|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2440|
We analyse the effects of government policies, such as entry regulation and standard setting, on the evolution of an industry, the global mobile telecommunications markets during 1981-1997. Among other results, we find that countries that issue first licenses at later dates converge rather slowly and only partially, compared to early-moving countries. We find that introducing competition has a strong immediate impact on the diffusion rate, but a rather weak impact afterwards. Sequential entry is preceded by pre-emptive behaviour. These findings are consistent with the presence of consumer switching costs. Concerning standards, we find that setting a standard has a significant positive impact on diffusion for the analogue technology, but not for the digital technology. This suggests that the network advantages from having a single standard are offset by the benefits derived from the battle for developing more efficient digital systems.