Estimating network effects and compatibility: Evidence from the Polish mobile market

Michal Grajek

Information Economics and Policy, 2010, vol. 22, issue 2, 130-143

Abstract: I develop a structural demand model for mobile telephony that facilitates the identification of network effects and inter-network compatibility. Network effects are measured as the dependence of consumer willingness to pay on the installed base of subscribers, compatibility as the relative extent of cross- and own-network effects. Estimating the model using quarterly panel data from the Polish mobile telephone market for the period 1996-2001, I find strong network effects and, despite full interconnection of the mobile telephone networks, low compatibility. I also show that ignoring network effects leads to overestimation of demand elasticity.

Keywords: Structural; econometric; model; Network; effects; Compatibility; Mobile; telephony (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (35)

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