Estimating network effects in mobile telephony in Germany

Doğanoğlu, Toker and Grzybowski, Lukasz (2007) Estimating network effects in mobile telephony in Germany. Information Economics and Policy, 19 (1). pp. 65-79. ISSN 0167-6245

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Official URL: http://dx.doi.org/10.1016/j.infoecopol.2006.11.001


In this paper we analyze the demand for mobile telecommunication services in Germany in the period from January 1998 to June 2003. During this time, the subscriber base grew exponentially by about 700% while prices declined only moderately by about 41%. We believe that prices alone cannot account for such rapid diusion and network eects have inuenced the evolution of the industry. We put this view to the test by using publicly available data on subscriptions, price indices and churn rates. Using churn rates gave us approximate sales levels which enabled us to use standard methods to investigate the eect of network size on demands. Our estimates of a system of demand functions show that network eects played a signicant role in the diusion of mobile services in Germany.

Item Type:Article
Uncontrolled Keywords:mobile telephony; discrete choice; network effects
Subjects:H Social Sciences > HE Transportation and Communications
ID Code:197
Deposited By:Uğur Toker Doğanoğlu
Deposited On:19 Dec 2006 02:00
Last Modified:25 May 2011 14:03

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