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ESMT Working Paper
ESMT Working Paper No. 17-04
Michał Grajek, Klaus Gugler, Tobias Kretschmer, Ion Mişcişin (2017)
Subject(s)
Economics, politics and business environment; Information technology and systems; Technology, R&D management
Keyword(s)
Telecom mergers, static and dynamic efficiency, difference-in-difference
JEL Code(s)
L22, O33, G34, L96
This paper studies five mergers in the European wireless telecommunication industry and analyzes their impact on prices and capital expenditures of both merging carriers and their rivals. We find substantial heterogeneity in the relationship between increases in concentration and carriers’ prices. The specifics of each merger case clearly matter. Moreover, we find a positive correlation between the price and the investment effects; when the prices after merger increase (decrease), the investments increase (decrease) too. Thus, we document a trade-off between static and dynamic efficiencies of mergers.
Pages
40
ISSN (Print)
1866–3494
ESMT Working Paper
ESMT Working Paper No. 17-02
Wolfgang Briglauer, Carlo Cambini, Michał Grajek (2017)
Subject(s)
Economics, politics and business environment; Information technology and systems; Technology, R&D management
Keyword(s)
Internet access market, access regulation, investment, infrastructure, Next Generation Networks, broadband, telecoms, cable operators and Europe
JEL Code(s)
L96, L51
In this paper we study how the coexistence of access regulations for legacy (copper) and fiber networks shapes the incentives to invest in network infrastructure. To this end, we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 EU member states over the last decade. Our theoretical model extends the existing literature by, among other things, allowing for heterogeneous entrants in internet access markets, as we consider both other telecom and cable TV operators as entrants. In the empirical part, we use a novel data set including information on physical fiber network investments, legacy network access regulation and recently imposed fiber access regulations. Our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators, but, in line with our theoretical model, do not affect cable TV operators.
Pages
45
ISSN (Print)
1866–3494
ESMT Working Paper
ESMT Working Paper No. 16-05
Joseph A. Clougherty, Michał Grajek, Oz Shy (2016)
Subject(s)
Economics, politics and business environment
Keyword(s)
Adoption, quality management, standards, mimicry, contagion
Operations management scholarship has focused on reference-group adoption positively influencing focal-facility adoption; i.e., positive imitation parameters manifest due to the presence of mimicry and contagion. We instead argue that the incentive to adopt a quality-management system can be inversely related to reference-group diffusion. Our theoretical model formalizes the potential for strategic substitution and negative imitation parameters to be applicable in quality-management adoption. We compile a dataset of 2,895 facility-level observations that allows for three different industry-level reference groups; i.e., domestic industry, domestic exporters and foreign exporters. When undertaking probit estimations that do not account for appropriate fixed effects, we find positive imitation parameters which support the presence of mimicry and contagion. Yet when accounting for fixed effects, the imitation parameters turn negative in line with the presence of strategic substitution. Furthermore, the negative influence of reference-group adoption on focal-facility adoption is robust across the three reference groups.
Pages
37
ISSN (Print)
1866–3494
Subject(s)
Economics, politics and business environment
Keyword(s)
Networks, international trade, standards, technical trade barriers, ISO 9000
JEL Code(s)
C51, F13, L15
Pages
57
ISSN (Print)
0898-2937
ESMT Working Paper
ESMT Working Paper No. 11-03 (R2)
J.P. Eggers, Michał Grajek, Tobias Kretschmer (2012)
Subject(s)
Economics, politics and business environment; Strategy and general management; Technology, R&D management
Keyword(s)
pre-entry experience, mobile telecommunications, consumer segments, complementary assets, core technical knowledge
JEL Code(s)
C51, L10, O33
We study how two distinct types of pre-entry experience – core technological experience and market-based complementary experience – affect post-entry performance in a new industry. We focus on the fit between capabilities generated through pre-entry experience and the preferences of heterogeneous consumer segments. Specifically, we suggest that firms with pre-entry experience in the focal technology will attract more valuable consumers, but as these consumers typically make adoption decisions early the firm must enter early to benefit. Conversely, firms with pre-entry experience in the focal market will attract a larger share of less valuable consumers regardless of entry timing. Our empirical analysis of the global 2G mobile telecommunications industry supports our theory and provides important insights for research on experience and entry dynamics in high-technology industries.
Accepted for publication in Organization Science under title Experience, consumers, and fit: Disentangling performance implications of pre-entry technological and market experience in 2G mobile telephony.
Pages
38
ISSN (Print)
1866–3494
ESMT Working Paper
ESMT Working Paper No. 08-004 (R1)
Michał Grajek, Tobias Kretschmer (2010)
Subject(s)
Economics, politics and business environment
Keyword(s)
critical Mass, network effects, technology diffusion, cellular telephony
JEL Code(s)
C53, L14, M37
Critical Mass is a common feature of technology diffusion processes. We develop a structural model of demand with network effects to provide a rigorous definition of critical mass as a function of installed base, price and network effects. Using data from the digital cellular telephony market, we identify critical mass phenomena and find that differences in the critical mass point in different countries rest mainly on different countries' socioeconomic characteristics and the extent of competition in a country. This application illustrates that our demand model can be operationalized easily and can generate theoretically grounded empirical insights about critical mass phenomena.
Pages
44
ISSN (Print)
1866–3494
Subject(s)
Economics, politics and business environment
Keyword(s)
International trade, standards, technical trade barriers, ISO 9000, networks
JEL Code(s)
F13, L15, C51
International standards have the potential to both promote and hinder international trade. Yet empirical scholarship on the standards-trade relationship has been held up due to some methodological challenges: measurement problems, varied effects, and endogeneity concerns. We are able to surmount these challenges while considering the impact of one particular standard on the country-pair trade flows between 91 nations over the 1995-2005 period. To deal with these challenges, we measure the degree of standardization via the penetration of ISO 9000 in individual nations, allow ISO diffusion to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) effects, and use instrumental variable and panel data techniques to overcome endogeneity concerns. We find strong evidence in support of ISO 9000 involving a common-language effect that enhances country-pair trade; yet, the evidence is more mixed with regard to the quality-signaling and information/compliance-cost effects. While we find ISO-rich nations (most notably European) to clearly benefit from the worldwide diffusion of standardization, ISO 9000 represents a de facto trade barrier for nations (e.g., the US and Mexico) lagging behind in terms of adoption.
Pages
48
ISSN (Print)
1866–3494
Subject(s)
Economics, politics and business environment
Keyword(s)
Telecommunications, access regulation, unbundling, investment
JEL Code(s)
C51, L59, L96
We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering 70+ fixed-line operators in 20 countries over 10 years. Our econometric model accommodates: different investment incentives for incumbents and entrants; a strategic interaction of entrants' and incumbents' investments; and endogenous regulation. We find access regulation to negatively affect both total industry and individual carrier investment. Thus promoting market entry by means of regulated access undermines incentives to invest in facilities-based competition. Moreover, we find evidence of a regulatory commitment problem: higher incumbents' investments encourage provision of regulated access.
Pages
29
ISSN (Print)
1866–3494
ESMT Working Paper
ESMT Working Paper No. 07-002
Jonathan Beck, Michał Grajek, Christian Wey (2007)
Subject(s)
Economics, politics and business environment
Keyword(s)
Diffusion, information technology, retail competition
JEL Code(s)
L5, L81, O33
Cross-country or cross-industry studies of technology diffusion typically estimate how independent factors affect diffusion speed or timing, often based on a two-stage approach. In many applications, however, countries (industries) differ most in the saturation level of diffusion. In a novel, single-stage econometric approach to a standard diffusion model, we therefore estimate how the saturation level co-varies with independent factors. In our application to diffusion of an important retail information technology, we focus on the competitive effect of hypermarkets (superstores). We also find standard scale, income and labor substitution effects.
Pages
28
ISSN (Print)
1866–3494
Subject(s)
Economics, politics and business environment
Keyword(s)
structural econometric model, network effects, compatibility, mobile telecommunications
JEL Code(s)
C51, D12, L96
I develop a structural demand model for mobile telephone service, which facilitates the identification of network effects and compatibility between networks. Network effects are measured by the dependence of consumer willingness to pay on the installed base of subscribers. Compatibility is measured by the relative extent of cross- and own-network effects. I then estimate the model using quarterly panel data from the Polish mobile telephone industry from 1996-2001 and find strong network effects and - despite full interconnection of the mobile telephone networks - low compatibility. I also show that ignoring network effects leads to an overestimation of elasticity of demand.
Pages
46
ISSN (Print)
1866–3494