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Entry, standards and competition : firm strategies and the diffusion of mobile telephony

Koski, Heli and Kretschmer, Tobias (2005) Entry, standards and competition : firm strategies and the diffusion of mobile telephony. Review of Industrial Organization, 26 (1). pp. 89-113. ISSN 0889-938X

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Identification Number: 10.1007/s11151-004-4085-0

Abstract

This paper studies the effects of a country’s regulatory setting and competitive environment on the performance of second-generation (2G) mobile telecommunication. We consider three dimensions of sector performance: entry time, service prices and diffusion. We address the question of non-random selection arising from cross-country differences in the timing of the commercialization of new technologies. Our empirical exploration shows that this type of sample selection may indeed be a substantial problem in cross-country studies on technology diffusion and yield biased estimates of the policy variables of interest. Our estimation results suggest that standardization accelerates 2G entry and diffusion, although within-standards competition triggers less aggressive price competition than between-standards competition. We also find that an early monopolist will price more aggressively to build up an installed base. Furthermore, we find that liberalizing markets for incumbent technologies (i.e. fixed line telephony) has accelerated the commercialization of 2G.

Item Type: Article
Official URL: http://www.springerlink.com/content/100336/
Additional Information: © 2005 Springer
Divisions: Management
Centre for Economic Performance
Subjects: H Social Sciences > HE Transportation and Communications
Sets: Research centres and groups > Managerial Economics and Strategy Group
Departments > Management
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 08 Sep 2008 15:53
Last Modified: 06 Jul 2020 09:48
URI: http://eprints.lse.ac.uk/id/eprint/16163

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