L13

Oligopoly and Other Imperfect Markets

Substitution between fixed and mobile data amidst high levels of poverty and inequality

Ryan Hawthrone and Lukasz Grzybowski

Mobile broadband is the main means of connecting to the internet in developing countries, where fixed-line coverage is typically limited or non-existent. As a result, governments in developing countries are seeking means by which mobile broadband penetration might be increased.

Narrowing the ‘digital divide’: the role of complementarities between fixed and mobile data in South Africa

We study substitution between fixed and mobile broadband services in South Africa using survey data on 134,000 individuals between 2009 and 2014. In our discrete-choice model, individuals choose fixed or mobile and data services in a framework that allows them to be substitutes or complements. We find that voice services are complements on average but data services are substitutes. However, many consumers see data services as complements.

Benefits of regulation vs competition where inequality is high: The case of mobile telephony in South Africa

We test for the distributional effects of regulation and entry in the mobile telecommunications sector in a highly unequal country, South Africa. Using six waves of a consumer survey of over 134,000 individuals between 2009-2014, we estimate a discrete-choice model allowing for individual-specific price-responsiveness and preferences for network operators. Next, we use a demand and supply equilibrium framework to simulate prices and the distribution of welfare without entry and mobile termination rate regulation.

The Competitive Status of the South African Wheat Industry

This article investigates the competitiveness of the South African wheat industry and compares it to its major trade partners. Since 1997, the wheat-to-bread value chain has been characterised by concentration of ownership and regulation. This led to concerns that the local wheat market is losing international competitiveness. The competitive status of the wheat industry, and its sub-sectors, is determined through the estimation of the relative trade advantage (RTA). The results revealed declining competitiveness of local wheat producers.

The role of network effects and consumer heterogeneity in adoption of mobile phones: evidence from South Africa

In this paper we analyze the role of network effects and consumer heterogeneity in the adoption of mobile phones. We estimate the decision to adopt a mobile phone using panel survey data of South African households between the years 2008 and 2012, which includes interviews with all adult household members.

Fixed-to-Mobile Substitution in the European Union

This paper analyzes substitution between access to fixed-line and mobile telephony in the European Union. We estimate a structural model of household's demand for: (i) fixed-line only; (ii) mobile only; (iii) and both fixed-line and mobile access. We find that decreasing prices for mobile services increase the share of 'mobile only' households and decrease shares of 'fixed only' and 'fixed + mobile' households which suggests substitution between fixed-line and mobile connections.

Economies of Scale and Pension Fund Plans: Evidence from South Africa

The focus of this paper is on the presence of economies of scale in administering pension funds. We make use of a unique dataset with extensive information on South African retirement funds from 1996 to 2006. For almost fifty years now, South Africa has operated under a system with small social security bene…ts but with considerable options and freedom to long-term savers. The dataset contains aggregate information for various fund types, fund classes, as well as different benefit structures.

Endogenous market transparency and product differentiation

This paper endogenizes both market transparency and product differentiation in a model of informative advertising á la Grossman and Shapiro (1984). We find, contrary to Schultz (2004), that an increase in market transparency raises firm profits but has no effect on product differentiation. We also find that a move from exogenous to endogenous market transparency is detrimental to welfare.

Loss leader or low margin leader? Advertising and the degree of product differentiation

This paper attempts to isolate the conditions that give rise to loss leader pricing. I show that for sufficiently low distance between firms, the advertised good is priced below cost irrespective of whether firms advertise the same or different products. Instead, if products are sufficiently differentiated, loss leader pricing may result only if firms advertise the low reservation value product, otherwise the advertised good is a low margin leader.

Equilibrium Pricing When Only Some Goods Are Advertised

We study how price advertising of a subset of products aspects equilibrium pricing and advertising under low and high product differentiation. We find that, when firms sell products with the same reservation price, loss-leader pricing obtains only when differentiation is low. However, when reservation prices differ, equilibrium may entail loss-leader pricing when differentiation is high.

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