The Effect of Market Structure on Cellular Technology Adoption and Pricing

Abstract

We examine how structural changes in the mobile telecommunications industry between 1996, when local markets were duopolies, and 1998, when varying degrees of regulated entry had occurred, affected firms' product offerings and nonlinear pricing strategies. We relate firms' digital technology adoption and the characteristics of their calling plan menus to the amount of entry in local markets. We find that entry induces firms to offer larger menus with more evenly spread plans, both directly and by accelerating the introduction of digital menus with such features. Prices decline with entry, in particular for high-valuation consumers who benefit from steeper quantity discounts. (JEL L11, L13, L96, L98, O33)

Nonlinear Pricing and Tariff Differentiation: Evidence from the British Electricity Market

“…Empirical literature on nonlinear pricing has expanded considerably in recent years. Leslie (2004) estimates the welfare effects of price discrimination at a Broadway theatre; Cohen (2008) demonstrates that 35-45% of the unit price variation in paper towels is consistent with price discrimination; and several papers show how increases in competition can i) increase the number of pricing options offered by firms (Borzekowski et al, 2009 andSeim andViard, 2011); and ii) reduce the level of firms' tariffs, with a greater reduction for higher usage consumers (Miravete and Ro ¨ller, 2004;Busse and Rysman, 2005;and Seim and Viard 2011). In addition, McManus (2007) examines the empirical implications of Armstrong and Vickers (2001) and Rochet and Stole (2002) in the context of product size.…”

Sooner or Later? The Role of Adoption Timing in New Technology Introduction

“…Prior empirical findings on the effect of competition (measured by market concentration) on adoption speed are mixed; for example, Levin et al (1987), Hannan and McDowell (1984), Escuer et al (1991), and Karshenas and Stoneman (1993), respectively, have found a positive, negative, inverted-U shape, and non-significant relationship. These conflicting findings have been attributed to their idiosyncrasies in entry and product introduction strategies or industrial structures (e.g., Escuer et al 1991, Seim andVaiard 2011). Our model, accommodating various relationships between competition and adoption speed, offers an alternative explanation that these mixed empirical findings might have been driven by different intervals of competition intensity in each study sample.…”

Online retailers' price structure decisions in competitive markets: A structure–conduct–performance framework

“…With the SCP paradigm, competitive intensity in a market is one of the major market structure characteristics influencing firms' pricing behaviors (Indounas, 2018; Seim & Viard, 2011; Singh & Zhu, 2008). There may be numerous alternative retailers in a competitive market who may provide less differentiated products or services for consumers to choose from.…”

“…With the SCP paradigm, competitive intensity in a market is one of the major market structure characteristics influencing firms' pricing behaviors (Indounas, 2018;Seim & Viard, 2011;Singh & Zhu, 2008).…”