nep-com New Economics Papers
on Industrial Competition
Issue of 2017‒09‒24
twenty-two papers chosen by
Russell Pittman
United States Department of Justice

  1. Spillover and R&D Incentives under Incomplete Information in a Duopoly Industry By Chatterjee, Rittwik; Chattopadhyay, Srobonti; Kabiraj, Tarun
  2. Market Power and Welfare in Asymmetric Divisible Good Auctions By Manzano, Carolina; Vives, Xavier
  3. The Mechanism behind Product Differentiation: An Economic Model By Harashima, Taiji
  4. Negative consumer value and loss leading By Caprice, Stéphane; Shekhar, Shiva
  5. Wholesale Pricing with Incomplete Information about Private Label Products By Johannes Paha
  6. How Efficient is Dynamic Competition? The Case of Price as Investment By Besanko, David; Doraszelski, Ulrich; Kryukov, Yaroslav
  7. Price-Setting and Attainment of Equilibrium: Posted Offers Versus An Administered Price By Collins, Sean M.; James, Duncan; Servátka, Maroš; Woods, Daniel
  8. On the Profitability of Interfirm Bundling in Oligopolies By Sang-Hyun Kim; Jong-Hee Hahn
  9. Mind the gap: Platform ethics and competition issues By Nicholls, Rob
  10. Single Till or Dual Till at airports: a Two-Sided Market Analysis By Estelle Malavolti
  11. Competition and vertical/agglomeration effects in media mergers: bagging bundle benefits By Howell, Bronwyn E; Potgieter, Petrus H.
  12. The Hard Decision of Mobile Operators: A Dumb Pipe or a Value-Added Service Provider By Liu, Chen-Hao; Huang, Kuang-Chiu
  13. Bundling, consumer retention and entry: evidence from fixed broadband market By Grzybowski, Lukasz; Liang, Julienne; Zulehner, Christine
  14. The Battlefield of IoT: Competitive and Cooperative Relationship Among Smart Home Vendors By Huang, Kuang-Chiu; Lin, Yu-Cheng
  15. Identifying the Effect of Mobile Operating Systems on the Mobile Services Market By Kuroda, Toshifumi; Koguchi, Teppei; Ida, Takanori
  16. Network tower sharing and telecom infrastructure diffusion in Ghana - a Structure-Conduct-Performance approach By Osei-Owusu, Alexander; Henten, Anders
  17. Growth of Global Over-the-Top and Korean Media Market: Competition and Regulatory Policy Issues By Lee, Sangwon; Lee, Seonmi; Brown, Justin
  18. Fixed-to-Mobile Substitution: Effects of Mobile Broadband Subscription on Fixed Broadband Termination By Leurcharusmee, Supanika; Sirisrisakulchai, Jirakom; Suriya, Komsan; Keesookpun, Chutipong; Srinuan, Pratompong
  19. The Coevolutionary Relationship of Technology, Market and Government Regulation in Telecommunications By Lin, Xuchen; Lu, Ting-Jie; Chen, Xia
  20. Mobile Game Price Discrimination effect on users of Freemium services– An initial outline of Game of Chance elements in Japanese F2P mobile games By Koeder, Marco; Tanaka, Ema; Sugai, Philip
  21. Competitions among OTT TV Platforms and Traditional Television in Taiwan: A Niche Analysis By Chen, Yi-Ning Katherine
  22. Paradigm Shift of Net Neutrality in the United States By Cheng, Fa‐Chang; Yeh, Chih‐Liang

  1. By: Chatterjee, Rittwik; Chattopadhyay, Srobonti; Kabiraj, Tarun
    Abstract: Spillover of R&D results in oligopolistic industries may affect the R&D decisions of firms. How much a newly eveloped technology by a firm gets spilled over to its rival firms may or may not be observable by the concerned firm. This paper considers a two stage game involving two firms. In the first stage the firms decide whether to invest in R&D and in the next stage they compete in a Cournot duopoly market. The R&D incentives of firms are compared under alternative assumptions of complete and incomplete information scenarios involving general distribution function of types. The results indicate that the impact of availability of more information regarding rival’s ability to benefit from spilled over knowledge on R&D activities of firms is ambiguous.
    Keywords: R&D incentives, Duopoly, Asymmetric information, Spillover, Type distribution
    JEL: D43 D82 L13 O31
    Date: 2017–06–01
  2. By: Manzano, Carolina; Vives, Xavier
    Abstract: We analyze a divisible good uniform-price auction that features two groups each with a Önite number of identical bidders. At equilibrium the relative market power (price impact) of a group increases with the precision of its private information and declines with its transaction costs. An increase in transaction costs and/or a decrease in the precision of a bidding groupís information induces a strategic response from the other group, which thereafter attenuates its response to both private information and prices. A "stronger" bidding group -which has more precise private information, faces lower transaction costs, and is more oligopsonistic- has more price impact and so will behave competitively only if it receives a higher per capita subsidy rate. When the strong group values the asset no less than the weak group, the expected deadweight loss increases with the quantity auctioned and also with the degree of payo§ asymmetries. Price impact and the deadweight loss may be negatively associated. The results are consistent with the available empirical evidence. KEYWORDS: demand/supply schedule competition, private information, liquidity auctions, Treasury auctions, electricity auctions, market integration. JEL: D44, D82, G14, E58
    Keywords: Teoria de la informació (Economia), Mercat -- Anàlisi, Bancs centrals, Subhastes, 33 - Economia,
    Date: 2017
  3. By: Harashima, Taiji
    Abstract: The strategy of product differentiation has been viewed as very important in the field of business administration, but it has not necessarily been viewed as an important source of large differences in firms’ profits in the field of economics. In this paper, this apparent contradiction is examined based on the concepts of “ranking preference and value.” In the proposed model, if a product’s implicit rank is higher, households will purchase the product far more often than competing products even if their qualities are almost identical and the tastes of households are uniformly distributed. Even a slight difference in quality can result in a clear difference in implicit ranks and consequently large differences in firms’ profits. Therefore, the effects of differentiation are amplified by ranking preference, and product differentiation efforts are truly very important for firms.
    Keywords: Product differentiation; Ranking preference; Ranking value; Monopoly power: Monopoly profits; Marketing strategy
    JEL: D42 D43 M10 M31 M37
    Date: 2017–09–22
  4. By: Caprice, Stéphane; Shekhar, Shiva
    Abstract: Large retailers competing with smaller stores that carry a narrower range can exercise market power by pricing below cost for some of their products. Below-cost pricing arises as an exploitative device rather than a predatory device (e.g., Chen and Rey, 2012). Unlike standard textbook models, we show that positive consumer value is not required in these frameworks. Large retailers can sell products offering consumers a negative value. We use this insight to revisit some classic issues in vertical relations.
    Keywords: Multi-product retailers; loss-leading; negative consumer value
    JEL: L13 L81
    Date: 2017–08
  5. By: Johannes Paha (Justus-Liebig-University Giessen)
    Abstract: This article provides a theoretical model analyzing wholesale pricing tariffs set by a monopolistic manufacturer for its branded product that is sold to final customers by a monopolistic retailer. The bargaining power of the downstream retailer is strengthened by offering also a vertically differentiated private label product whose production costs are known only incompletely to the upstream manufacturer. The model shows that the manufacturer can avoid double marginalization and implement the full information outcome by combining a quantity discount with a market-share discount where only a retailer with a strong private label retroactively receives an allowance. Under these circumstances it is unprofitable for the manufacturer to impose exclusive dealing on the retailer.
    Keywords: Branded Products, Incomplete Information, Market-Share Discounts, Private Label Products, Wholesale Pricing
    JEL: D42 D82 L15 L42
    Date: 2017
  6. By: Besanko, David; Doraszelski, Ulrich; Kryukov, Yaroslav
    Abstract: We study industries where the price that a firm sets serves as an investment into lower cost or higher demand. We assess the welfare implications of the ensuing competition for the market using analytical and numerical approaches to compare the equilibria of a learning-by-doing model to the first-best planner solution. We show that dynamic competition leads to low deadweight loss. This cannot be attributed to similarity between the equilibria and the planner solution. Instead, we show how learning-by-doing causes the various contributions to deadweight loss to either be small or partly offset each other
    Keywords: competition for the market; industry dynamics; Markov perfect equilibrium; Predatory Pricing; price as investment; welfare
    Date: 2017–09
  7. By: Collins, Sean M.; James, Duncan; Servátka, Maroš; Woods, Daniel
    Abstract: The operation of the posted offer market with advance production environment (Mestelman and Welland, 1988), appropriately parameterized, differs from that of the market entry game (Selten and Gueth, 1982), appropriately presented, only in terms of price-setting. We establish the effect of this difference in price-setting on attainment of the competitive equilibrium allocation while controlling for effects relating to the presentation of the market entry game and to the stationarity or non-stationarity of environment. Free posting of prices promotes convergence to the competitive equilibrium allocation, while the typical market entry game data can be characterized as displaying cycling prices.
    Keywords: market entry game; posted offer market; advance production; isomorphism; equilibration
    JEL: C9 C91 D4
    Date: 2017–09–19
  8. By: Sang-Hyun Kim (Yonsei University); Jong-Hee Hahn (Yonsei University)
    Abstract: This paper examines the pro?tability of bundling or exclusive dealing among independent ?rms selling di¢´erentiated products. We show that, compared with separate sales, inter?rm bundling generally raises prices and is more pro?table provided the distribution of consumer valuations for products are su¡Ë ciently sym- metric and centered in the middle. Hence the ?rms have mutual incentives to o¢´er their products as a bundle or make exclusive dealing arrangements. We shed new light on the role of bundling in relaxing competition in oligopoly, the importance of which has been neglected in the previous literatures.
    Keywords: inter?rm bundling, (in)compatibility, exclusive dealing, antitrust
    JEL: L11 L13
    Date: 2017–09
  9. By: Nicholls, Rob
    Abstract: The algorithm driven conduct of platform operators ; as the expert handlers of big data ; is starting to challenge the way in which competition law needs to be enforced. Businesses ; especially platform operators ; acquire data and particularly pricing information from other businesses in real-time. This leads to specific potential problems with autonomous actors engaged in algorithmic tacit collusion. These problems are compounded when usual legal tests for collusive price fixing require both a meeting of the minds of the colluding firms and a commitment to the price fixing conduct. It is not clear that bots meet either of these tests. The paper finds that price fixing is unethical using multiple analytical lenses but that the illegality of algorithmic tacit collusion is less clear. By considering the issues associated with concerted practices from a legal and ethical perspective ; the paper charts some approaches that might be applied. It uses changes in competition law in Australia to highlight potential ways of dealing with algorithmic tacit collusion ; but also highlights the potential unintended consequences associated with such changes.
    Keywords: Algorithmic tacit collusion,bots,business ethics,cartel conduct,concerted practices,price fixing
    Date: 2017
  10. By: Estelle Malavolti (TSE - Toulouse School of Economics - Toulouse School of Economics, ENAC - Ecole Nationale de l'Aviation Civile)
    Abstract: Big airports profits are more and more often coming from commercial activities such as retailing. However, commercial services are relatively far from the original mission of the airport: providing airlines with aviation services such as ground handling, terminal management or airside operations, and being regulated for that because of an obvious dominant position with respect to airlines. For this reason, one can advocate for the separation of the two activities, i.e. for a dual till approach, in which only the aeronautical activity is regulated. We, instead, suggest that a single till regulation, in which the total profit of the airport is examined, is relevant because it allows to take into account the externalities existing between retailing and aeronautical services. Using a two-sided market approach (Armstrong, 2006, Rochet-Tirole 2003, 2006), we show that the airport is a platform which makes the shops and the passengers meet. The retailing activity depends on how many passengers are circulating and connecting at the airport, as well as the time they spent in the airport, while passengers value the least connecting time as possible. We show that the aeronautical tax can be either higher or lower under single till depending on whether the impact of the passengers demand or of the waiting time is the more important for the shops.
    Keywords: two-sided market, network externalities, air transport economics
    Date: 2016–05–01
  11. By: Howell, Bronwyn E; Potgieter, Petrus H.
    Abstract: Existing frameworks (such as used by the New Zealand Commerce Commission in its recent evaluation of the proposed merger between Sky Television and Vodafone) require, as a first step, the definition of the relevant markets affected by the merger or vertical integration activity. Historic precedents in the telecommunications sector have tended towards finding that vertical agglomeration effects when network operators integrate downstream into the provision of applications and services to end-consumers are harmful to competition. Such Structure-Conduct-Performance methods of evaluating mergers and other aspects of market performance are problematic when the firm(s) concerned supply many different products, both together in various different bundle forms and separately as individual components. Defining the markets for (merger) analysis on the basis of only one of the components in a possible bundle that the (merged) firm may supply risks overlooking the complex interactions that occur on the demand side when consumers make their purchase decisions. This is especially likely to be an issue in the supply of internet applications and content bundled with broadband internet access. Consumers have heterogeneous preferences for different applications and content (hereafter ‘content’), and will purchase (or access) many different content types. Even though ownership of rights to distribute one content may confer a degree of market power in for the owner-provider over those consumers with very strong preferences for this content over all others, it is not axiomatic that the firm will be able to exert this power over consumers whose preferences are more evenly distributed. The more variety there is in the content bundles available, and the more heterogeneous are consumers’ preferences across the various content types, the greater is the number of possible markets in which interaction is likely to occur and the more problematic it becomes to identify the relevant markets for analysis of mergers and antitrust cases. We propose that classic merger and antitrust analysis based on econometric cost-benefit analysis can be augmented by using simulation and numerical analysis of a range of bundle offers expected to be relevant in decision-making. We develop a simple model and use it to demonstrate how this approach could have informed the recent New Zealand Commerce Commission decision about the proposed Sky-Vodafone merger by offering some quantitative estimates of total and consumer welfare and provider profits under the proposed factual (with bundling) and counterfactual (individual component sales) cases. The approach may also inform other analyses, such as the assessment of the effects of two-sided markets and firm pricing decisions.
    Date: 2017
  12. By: Liu, Chen-Hao; Huang, Kuang-Chiu
    Abstract: With progress of communication technologies, it enables rapid development of all kinds of services over the Internet, and we call these services with a name as over the top (OTT). The penetration rate of 4G has increased rapidly and also increased mobile operator’s revenue. With the increase of digital convergence demand and other video platforms appear, it can be predicted the level of complex and competition will rise in whole market. The business expansion from scale of economies and the popularity of flat rates all have provided some convenience for people to surf and enjoy OTT services with no worry. However, the mobile Internet service providers (ISPs) have increase the number of market penetration rate quickly and have to deal with huge mobile traffic generated from OTT services. Video streaming accounts for 58 percentages in all mobile data traffic from a recent survey and it indicates that OTT videos streaming services convert mobile operators to be dumb pipes. If mobile operators have to maintain quality of service, they need to invest more money to upgrade their communication infrastructure. Although voice of IP (VoIP) services provided by Facebook, line and Skype do not consume huge amount of mobile bandwidth, it decreases mobile operator’s’ voice revenues and average revenue per user (APRU) significantly. Moreover, the revenue of SMS from mobile operators decline dramatically, too. Therefore, the paper addresses whether mobile operators are capable facing the impact of OTT videos and VOIP, to cope with emerging challenges from OTT services. In Taiwan, all mobile operators have developed their OTT platforms, and some mobile operators bundle their OTT services and mobile Internet service together to make more attractive for reducing churn rates and increase ARPU. In addition, cooperation with content providers and mobile operators are necessities and large scale of merger and acquisition (M&A) between AT&T and Time Warner to enrich their OTT capacities also emerged. This paper discusses different options of mobile operators to cope with OTT challenges. 1. Mobile operators choose to be dumb pipes and upgrade their infrastructures aggressively, and adopt strategic alliance with OTT service providers. 2. Mobile operators aggregate contents to develop OTT platforms by themselves to compete with other OTT services providers. In addition, the paper also how do asymmetric regulations between BISPs and OTT service operators affect the competition between mobile operators and OTT service providers. One is network neutrality and the other is data protection of personal privacy. Network neutrality has been discussed and debated for many years with different kinds of interpretation, but restrictions of selling personal data for mobile operators can produce more notable effect. OTT service provides can sell customer data to make profits whether mobile operators can sell customer data with precise location data. In order to study the competition between mobile operators and OTT service providers clearly, we propose, basing on mobile operator’s perspective, six options from pure wholesale dumb pipe to fully bundle service provider. 1. Wholesale only. It means mobile operators won’t contact consumers directly, and provides their spectrum and infrastructure to mobile virtual network operators(MVNO). 2. Retail only. It means mobile operators focus on their mobile business (e.g. voice business and mobile data business) and don’t get involving in developing their OTT services. 3. Wholesale and retail together. But mobile operators do provide OTT services. 4. Wholesale, retail and strategic alliance with OTT service providers. Mobile operator do develop their own OTT services but take strategic alliance with other OTT service providers and bundle those services together. 5. Wholesale, retail, and develop their owned OTT platforms. Mobile operators can produce contents by themselves or purchase copyright from channel operators and other content providers. 6. The last option is to combine all of above five options. This study adopts cost-benefit analysis to compare total cost and benefit and assess profitability of each option, because cost-benefit analysis can provide quantitative number to aid for analyzing each option and obtaining a clear picture for input and output. The research outcome not only can depict the competition between mobile operators and OTT service providers clearly but also offers a valuable reference for NRAs, mobile operators and OTT service providers about how to regulate and how to compete with difference scenarios and options.
    Keywords: OTT,mobile operators,competition,asymmetric regulations,business strategy,options
    Date: 2017
  13. By: Grzybowski, Lukasz; Liang, Julienne; Zulehner, Christine
    Abstract: This paper answers two empirical questions. First, we analyze how fixed-mobile (quadruple-play) bundling impacts retention of consumers in fixed broadband market. Second, we assess how bundling by the incumbent operator impacts the market share and number of entrants who provide broadband services using incumbent's infrastructure. To address these questions we use a complete database of about 9.5 million subscribers to incumbent fixed broadband operator in a European country between March 2014 and February 2015. This data is combined with information on the market share and number of entrants in about 36,000 municipalities in this country. We find that consumers who bundle fixed and mobile services from the same provider are less likely to churn. Without quadruple-play bundling the annual retention of fixed broadband consumers would increase from 8.4% to 9.2%. Next, we find that the share of consumers having quadruple-play bundles with the incumbent has a negative impact on the market share and number of entrants. In the absence of quadruple- play bundling, the market share of entrants would be higher by about 6.8 percentage points. Quadruple-play bundling has also negative impact on the number of LLU entrants, which is bigger in the case of small LLU operators who cannot provide bundled offers themselves. This suggests that firms which cannot sell fixed-mobile bundles are disadvantaged in competition.
    Keywords: Quadruple-play,Bundling,Consumer retention,Market entry
    JEL: L13 L50 L96
    Date: 2017
  14. By: Huang, Kuang-Chiu; Lin, Yu-Cheng
    Abstract: The integration between electronic devices and networking enable convenient, comfortable, efficient and secure life. So there are a variety of smart home hubs and accessories migrating to daily life with all kinds of possibilities and extending the scope and coverage of Internet of Things (IoT). For an example, Amazon’s Echo launched in June 2015 and offers amazing capabilities. Its artificial intelligence voice assistant Alexa is a breakthrough invention, and people can not only search information, play music, read daily news, and place order instantly but also control auxiliary devices as television, air conditions, curtains, lights by their voice. In addition, the membership of Amazon, a giant of e-commerce, has reached to 65 millions prime membership and promotes Echo with affordable price $ 179 and five millions sales record. To exploit the value of network of this emerging market, Amazon has welcomed and invited third-party vendors to develop unique voice skills together and to establish the ecosystem effectively. Although Google’s Home launched lately in October 2016, its artificial intelligence voice assistant -Google Assistant is embedded strengths of Google search engine and sells for a competitive price $ 139 only. Google adopts the similar strategy to expand the eco-systems of smart home actively enhance smart home network effect with their huge resources. On the contrary, smart home hub vendors, Amazon, Google, and Samsung, not only compete each other, but also cooperate to enlarge this booming market together. For examples of cooperation case, the products of Nest which owned by Google compatible with Amazon’s Echo. Relatively, smart home auxiliary vendors, Philips, Nest, and Smartthings, adopt several strategic alliance with smart home hub vendors to compete on the one side and cooperate on the other side. Therefore, the interaction between hub vendors and auxiliary device vendors is an amazing game and affects the development of IoT future. Our study will outline its competition status and answer the question “how do stakeholders of smart home market cooperate and compete each other in the emerging stage?” The research method adopts three steps analysis for thorough study of the question. The Resource-based model from industry organization to analyze those smart home hub vendors for the 1st step. Value net model, Porter’s diamond model, and Ansoff matrix are analysis methods to be applied in the 2nd step for discussing external environment. And then, we enrich interaction discussion through case study as the last step. In the resource-based model, we address internal resources, capabilities, and core competences for both hub vendors and auxiliary device vendors to analyze competitive advantages. External analysis uses value net model to figure out how to develop strategies of horizontal and vertical competition in smart home industry. Also, we evaluate the capabilities of potential revenues and profits to analyze the relationship of each smart home hub enterprises, customers, suppliers, competitors, and complementors (smart home auxiliary vendors). Porter’s diamond model mainly focuses on market demand and government policies whether affect enterprises decisions, and chooses Ansoff matrix to analyze the development of different smart home products in different markets development decisions. Based on the prior analysis results, then we can take overall analysis on market level about the co-opetition relationship of network effect on smart home.
    Keywords: IoT,smart home,value net model,Porter’s diamond model,case study,Ansoff matrix,co-opetition
    Date: 2017
  15. By: Kuroda, Toshifumi; Koguchi, Teppei; Ida, Takanori
    Abstract: Modern economic theory predicts that tying can serve as a tool for leveraging market power. In line with this economic theory, competition authorities regulate the tying of Microsoft Windows with its Media Player or Internet browser in the EU and Japan. The authorities also take note of the market power of mobile handset operating systems (OSs) over competition in the app and services markets. However, no empirical evidence has thus far been presented on the success of government intervention in the Microsoft case. To assess the effectiveness of government intervention on mobile handset OSs, we identify the extent to which complementarity and consumer preferences affect the correlation between mobile handset OSs and mobile service app markets (mail, search, and map). We find significant positive complementarity between the mail, search, and map services, and mobile handset OSs. However, the elasticities of the mobile handset OS–mobile service correlations are rather small. We conclude that taking action to restrict mobile handset OSs is less effective than acting on mobile services market directly.
    Keywords: Mobile phone,Handset,Internet service,Platform competition
    JEL: L12 L43 L96
    Date: 2017
  16. By: Osei-Owusu, Alexander; Henten, Anders
    Abstract: The paper answers the following questions: whether infrastructure sharing policy been able to achieve its core objective of preventing network tower investment duplication in single locations? And whether pricing strategy employed by tower owners encourage sharing? The foundation of these issues is concerned with the structure of costs for providing sharing services, the nature of contracts or other conditions for commercialization, and the clash of different buyers (MNOs) of towers spaces. The implications for the diffusion of telecom infrastructure and services to poorly covered areas of these market conditions and the conduct of the market players constitute the primary focus of this research. For assessing the market structure, the behavior of market players, and the outcome of the sharing policy, a Structure-Conduct-Performance (SCP) framework is applied. A combination of qualitative and quantitative data were collected including ten (10) employees of the network companies, tower companies, internet service vendors and the regulatory agency (NCA) for interviews and reports on 2000 out of 5750 co-location tower sites (at the beginning of 2016) across the country were analyzed. Against the expectations of the regulator, infrastructure sharing is currently not effective. For rural communities, rather than sharing amidst non-pleasant market conduct from the incumbent operators, new entrant operators have chosen to build their own towers, holding back diffusion due to single cost ownership and also defeating the purpose of infrastructure sharing policy. Factors such as market size of firms and their degree of concentration will continue to affect conduct and performance, unless there is a strong institutional incentive for undertaking mandatory access strategies to challenge dominance to induce greater competition in markets.
    Date: 2017
  17. By: Lee, Sangwon; Lee, Seonmi; Brown, Justin
    Abstract: Global markets for OTT (Over-the-Top) services are growing. Focusing on OTT services in Korean media markets, this study explores technological, industrial, and policy factors in OTT markets. Specifically, platform competition and regulatory classification for market entry regulation, global OTT players’ negative impacts on national economy, reverse discrimination against domestic players and user protection issues are discussed. Based upon the discussion on competition and policy issues for OTT players, this study suggests future policy directions for Korean media markets.
    Keywords: Global Over-the-Top,Regulatory Policy,Korea,Platform Competition
    Date: 2017
  18. By: Leurcharusmee, Supanika; Sirisrisakulchai, Jirakom; Suriya, Komsan; Keesookpun, Chutipong; Srinuan, Pratompong
    Abstract: Motivation, background and problem statement: Fixed and mobile broadband substitutability has recently been a debate in the telecom industry as the issue affects infrastructure investment decisions of service providers and service obligation regulation decision of telecom authorities. Previous studies have debated over both the definition of substitutability, measurement and the conclusions. Theoretically, substitution is the demand side concept measured using the cross-price elasticity. With a unique dataset, this study takes a simpler approach to examine the fixed-to-mobile substitution. Instead of examining the problem through the estimation of cross-price elasticity, this study estimates the impact of users’ mobile broadband subscription on their decision to terminate fixed broadband subscription. Data and methodology: The data used in this study are from the 2016 Telecom Consumption Survey of Thailand by the National Broadcasting and Telecommunications Commission of Thailand. This study estimates the fixed to mobile substitution using the concept of average treatment effect of mobile broadband usage on the fixed broadband termination. Without random assignment, the estimation of factors determining the fixed broadband termination decision, focusing on the mobile broadband subscription, faces the endogeneity problem. Therefore, we applied the endogenous switching Probit model to estimate the average treatment effect. Results and concluding remarks: From the survey, 1949 respondents subscribed to a fixed broadband service at home at one point. Among them, 85.48 percent remain subscribed to the service and 14.52 percent has canceled the service prior to 2016. The regression analysis shows that mobile broadband subscription has a positive significant effect on the decision to cancel fixed broadband service. The contribution of the study lies on the heterogeneity of the level of fixed to mobile substitution across different groups of internet users. For those who are online for less than 40 hours per day, mobile broadband is considered as a substitute for fixed broadband to a certain level. For those whose lifestyle requires a higher usage of internet, the results show no substitution. As telecom regulations normally target to help users with lower telecom accessibility rather than those with higher level of usage, the higher level of fixed and mobile substitution for individuals with low usage should imply the possibility to unify regulatory framework for fixed and mobile broadband markets.
    Keywords: Fixed to mobile substitution,fixed broadband termination,endogenous switching regression
    Date: 2017
  19. By: Lin, Xuchen; Lu, Ting-Jie; Chen, Xia
    Abstract: The technical change in telecommunications industry is tremendous, and it is exactly the continuous technological progress in telecommunications that brings sustained prosperity and development of the telecommunications industry. Inthis paper, the interplay between technology, market and government in telecommunicationsis discussed brieflyin the first place, and thenwe introduce technologyand government into the traditional SCP paradigm as essential factorswhich have economic meaningstoconstruct a new industry analysis framework called TGM (SCP). Basedon this framework, we propose thespiral coevolutionmodel of telecommunications industrywhich elaborates on the interaction mechanism between technological innovation, government regulation and market evolution in telecommunications. Our study indicatesthatthe evolution of the telecommunications industry is the result of technological innovation, government regulation and market competition, and among the three, technological innovation is the fundamental driving force. Compared to the “invisible hand”—market and “visible hand” —government, we believe that technology is the “third hand” in telecommunications industry. The policy implications regarding thesefindingsaregiven at the end of this paper.
    Keywords: technological innovation,government regulation,telecommunications,industry analysis
    Date: 2017
  20. By: Koeder, Marco; Tanaka, Ema; Sugai, Philip
    Abstract: This paper offers a look at the Japanese mobile free to play market with a focus on “Gacha”, a game of luck mechanism used in many Japanese games. The paper tries to explain about the concept of Gacha, its different forms, some known regulation issues and briefly looks at player and professional’s insights and discusses an analytical framework for further studies to figure out the reason of player’s acceptance of price discrimination in F2P mobile games.
    Keywords: Free-to-play,freemium,mobile games,lottery,behavior,attitudes,virtual goods,Japan
    Date: 2017
  21. By: Chen, Yi-Ning Katherine
    Abstract: This study examines if OTT TV is a complement or a substitute for traditional TV. By categorizing satisfaction into seven dimensions, this study adopts niche theory to look at the aspects of gratification toward OTT TV’s complementarity of or replacement of cable TV. Following an online survey conducted during March 2016, 620 qualified responses were collected. The results show that the giant western OTT platforms overshadow the local OTT players. In terms of niche breadth, our findings present that OTT TV scores higher than traditional TV for all seven dimensions, with the greatest difference manifested on the dimension of convenience. For the niche overlap, our findings show that OTT and traditional TV share a high level of similarity on amusement and ease of use. Overall, OTT TV’s competitive superiority surpasses that of traditional TV in all dimensions. Implications for research and practices are discussed herein.
    Keywords: OTT,niche theory,viewing behavior,TV,streaming industry
    Date: 2017
  22. By: Cheng, Fa‐Chang; Yeh, Chih‐Liang
    Date: 2017

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