Randomized Entry: The Equilibrium Effects of Entry in Digital Financial Markets

Francis Annan

No 33134, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We created randomized variation across and within markets to estimate the equilibrium effects of small microenterprises’ entry into a new market: the market for mobile money services. Entry has a negative net effect on firm misconduct in mobile money. There is a positive direct effect but a similar-sized negative indirect effect on prices for non-financial goods/services. Market-level price-cost markups decreased, indicating net gains in consumer surplus. We find evidence of within-market revenue reallocation for mobile money, and a large services multiplier: revenues for non-financial goods/services increased by 20%, with aggregate service industry revenues increasing. We show these improvements come from adoption externalities and aggregate increase in household expenditures.

JEL-codes: D18 D62 G20 G50 L22 L26 O12 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-afr, nep-ban, nep-com, nep-fdg, nep-ind and nep-pay
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