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Competition in Network Industries: Evidence from the Rwandan Mobile Phone Network

Daniel Björkegren

No 2020-04, Working Papers from Brown University, Department of Economics

Abstract: This paper analyzes the potential for competition policy to affect welfare and investment in a network industry. When a network is split between competitors, each internalizes less network effects, but may still invest to steal customers. I structurally estimate the utility of adopting a mobile phone from subsequent usage, using transac-tion data from nearly the entire Rwandan network. I simulate the equilibrium choices of consumers and network operators. Adding a competitor earlier could have reduced prices and increased incentives to invest in rural towers, increasing welfare by the equivalent of 1% of GDP.

Date: 2020
New Economics Papers: this item is included in nep-com, nep-ind, nep-net and nep-pay
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