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Scoping for: Competition in Network Industries: Evidence from Mobile Telecommunications in Rwanda

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  • Daniel Björkegren

    (Brown University, Department of Economics, 64 Waterman Street, Providence RI 02912, USA)

Abstract

Many modern technologies have network effects, and as a result lead to industries with natural monopolies. How should societies discipline these industries? This is a preliminary paper that analyzes the scope for competition to affect welfare and investment in the Rwandan mobile phone network during a 4.5 year period of dramatic growth. I use transaction data from nearly the entire network of Rwandan mobile phone subscribers at the time. I use the method and estimates of Bjorkegren (2017), which identify network effects based on usage after adoption. The Rwandan government eventually allowed competition; I evaluate what may have happened had competition been introduced at an earlier stage of the network’s growth. Had the monopolist simply charged the eventual competitive prices, welfare would have risen substantially. However, only a fraction of the revenue from building the rural tower network came from calls within rural areas; as a result, had the rest of the network been split among providers, there may have been lowered incentives to invest. A subsequent version of this paper will simulate the effects of competition under different policy regimes.

Suggested Citation

  • Daniel Björkegren, 2017. "Scoping for: Competition in Network Industries: Evidence from Mobile Telecommunications in Rwanda," Working Papers 17-10, NET Institute.
    • Handle: RePEc:net:wpaper:1710
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    References listed on IDEAS

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    More about this item

    Keywords

    network goods; infrastructure; information technology;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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