Competition Reform and Household Welfare: A Microsimulation Analysis of the Telecommunication Sector in Ethiopia

Carlos Rodriguez Castelan (), Abdelkrim Araar, Eduardo Malásquez () and Rogelio Granguillhome Ochoa ()
Additional contact information
Carlos Rodriguez Castelan: World Bank
Rogelio Granguillhome Ochoa: World Bank
Authors registered in the RePEc Author Service: Carlos Rodríguez-Castelán

No 14044, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents a novel method for estimating the likely welfare effects of competition reforms for both current and new consumers. Using household budget survey data for 2015/16 for Ethiopia and assuming a reform scenario that dilutes the market share of the state-owned monopoly to 45 percent, the model predicts a 25.3 percent reduction in the price of mobile services and an increase of 4.6 million new users. This reform would generate a welfare gain of 1.37 percent among all consumers. Poverty rates are expected to decline by 0.31 percentage points, driven by a reduction of 0.22 percentage points for current consumers and 0.09 percentage points among new users. Inequality would increase by 0.23 Gini points since better off consumers are more likely to reap the benefits of greater competition. This method represents a powerful tool for supporting the analysis of competition reforms in developing countries, particularly in sectors known for excluding significant segments of the population due to high consumer prices.

Keywords: welfare effects; ICT; competition reform; simulations; Ethiopia (search for similar items in EconPapers)
JEL-codes: C15 D40 D60 I32 L86 N77 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2021-01
New Economics Papers: this item is included in nep-cmp, nep-com and nep-ict
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published - published in: Telecommunications Policy, 2022, 46 (2), 102243

Downloads: (external link)
https://docs.iza.org/dp14044.pdf (application/pdf)

Related works:
Journal Article: Competition reform and household welfare: A microsimulation analysis of the telecommunication sector in Ethiopia (2022)
Working Paper: Competition Reform and Household Welfare: A Microsimulation Analysis of the Telecommunication Sector in Ethiopia (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp14044

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().