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on Payment Systems and Financial Technology |
| By: | Hyungjin Kim (Sungkyunkwan University); Hyunchul Kim (Sungkyunkwan University) |
| Abstract: | As digital convergence is spreading more than ever, the lock-in effects of bundled services in the broadcasting and telecommunication market are receiving considerable attention. Antitrust authorities have questioned whether lock-in effects impede competition in telecommunications markets. However, the answer to this question remains indecisive because few studies have attempted to quantify the switching costs in bundles. We use novel consumer level data to examine switching costs of bundled products. We use the mixed logit model to estimate the demand for bundled packages, which include mobile, Internet, and paid-TV services. We measure switching cost by the decrease in utility when consumers change their service providers from period t-1 to period t. The results show that consumers experience additional costs when they switch from bundles. Our estimates indicate that consumers pay 3,238 KRW (about 3 USD) per month for changing from Double Play Service (paid TV with Internet) to other services and 3,510 KRW for Triple Play Service. The estimates of switching costs are smaller for the bundles without any commitment period requirement. This implies that stipulated service period and penalty intensify the lock-in effects. In the counterfactuals where we remove the penalty for switching from bundles, we find that consumer surplus increases by 3,714 KRW per month. We proposed policies which reduce penalties for cancellations or shorter stipulated service periods in order to reduce switching costs. |
| Keywords: | Switching costs, Lock-in, Bundles, Mixed logit model |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:5306986&r=pay |
| By: | José A. Montenegro (Department of Computer Science, University of Málaga); José L. Torres (Department of Economics, University of Málaga) |
| Abstract: | This paper applies the hedonic pricing approach to study the implicit prices of smartphone characteristics and consumer preferences. Currently, mobile phones are the most widespread technological product worldwide and their performance and technical characteristics have changed dramatically over a short period. The development of smartphones has been a revolution in itself in the mobile telecommunication industry, expanding the capabilities of handsets beyond those of a simple mobile phone. Competition between smartphone producers is erce and knowledge concerning consumers' preferences regarding smartphone features is vital to survival in this fast-changing market. This paper uses a hedonic pricing model to estimate the implicit prices of smartphone characteristics. A large set of characteristics are analysed including design, communication, connectivity, camera, display, hardware, multimedia, and power. The characteristics most valued by consumers are the screen, followed by memory, battery capacity, and weight. Consumers are willing to pay up to a 95% premium for an Apple smartphone. |
| Keywords: | Smartphones, hedonic pricing approach, characteristics' implicit prices, consumer preferences. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:mal:wpaper:2016-4&r=pay |
| By: | Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK) |
| Abstract: | Despite the evolving literature on the development benefits of mobile phones, we still know very little about factors that influence their adoption. Using twenty five policy variables, we investigate determinants of mobile phone penetration in 49 Sub-Saharan African countries with data for the period 2000-2012. The empirical evidence is based on contemporary and non-contemporary OLS, Fixed effects, System GMM and Quantile regression techniques. The determinants are classified into six policy categories. They are: (i) macroeconomic, (ii) business/bank, (iii) market-related, (iv) knowledge economy, (v) external flows and (vi) human development. Results are presented in terms of threshold and non-threshold effects. The former has three main implications. First, there are increasing positive benefits in regulation quality, human development, foreign investment, education, urban population density and internet penetration. Second, there is evidence of decreasing positive effects from patent applications. Third, increasing negative impacts are established for foreign aid and return on equity. Non-threshold tendencies are discussed. Policy implications are also covered with emphasis on policy syndromes to enhance more targeted implications for worst performing nations. |
| Keywords: | Panel data; Mobile phones; Development; Africa |
| JEL: | C23 L96 O11 O33 O55 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:16/046&r=pay |
| By: | Csóka, Péter; Herings, Jean-Jacques P. |
| Abstract: | We consider a situation in which agents have mutual claims on each other, summarized in a liability matrix. Agents' assets might be insufficient to satisfy their liabilities leading to defaults. In case of default, bankruptcy rules are used to specify the way agents are going to be rationed. A clearing payment matrix is a payment matrix consistent with the prevailing bankruptcy rules that satisfies limited liability and priority of creditors. Since clearing payment matrices and the corresponding values of equity are not uniquely determined, we provide bounds on the possible levels equity can take. Unlike the existing literature, which studies centralized clearing procedures, we introduce a large class of decentralized clearing processes. We show the convergence of any such process in finitely many iterations to the least clearing payment matrix. When the unit of account is sufficiently small, all decentralized clearing processes lead essentially to the same value of equity as a centralized clearing procedure. As a policy implication, it is not necessary to collect and process all the sensitive data of all the agents simultaneously and run a centralized clearing procedure. |
| Keywords: | networks, bankruptcy problems, systemic risk, decentralized clearing, indivisibilities |
| JEL: | C71 G10 |
| Date: | 2016–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2016/14&r=pay |
| By: | Takahashi, Kazushi |
| Abstract: | We study how the recent expansion of mobile phone coverage affects the degree of consumption smoothing using data collected in rural Uganda in 2003 and 2005. We found that mobile phone coverage helps consumption smoothing against covariate shocks but not idiosyncratic shocks. Unlike in studies on informal risk sharing, but in line with the permanent income hypothesis, we also found that household-level consumption changes are insenitive to transitory household income shocks, but sensitive to permanent household income shocks. Full intertemporal self-insurance is, however, impossible under imperfect credit and insurance markets. Our results show that households effectively combine self-insurance, local risk sharing, and long-distance risk sharing via mobile phone, where idiosyncratic shocks are partially mitigated by self-insurance as well as mutual insurance within local communities, while covariate shocks are partially mitigated by self-insurance and across distant communities via mobile phones. |
| Keywords: | risk sharing, mobile phone network, consumption smoothing, Uganda |
| JEL: | D81 D85 O17 |
| Date: | 2016–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75135&r=pay |
| By: | Karol Jan Borowiecki (Department of Economics, Trinity College Dublin); Trilce Navarrete (Department of Business and Economics, University of Southern Denmark) |
| Abstract: | Heritage institutions house cultural and research content, which is the key source to stimulate soft innovation. Despite the potential, heritage collections are mostly inaccessible via digital mediums. We analyze the macro, meso and micro conditions of heritage organizations across Europe to identify the key determinants that foster soft innovation as reflected by the share of collection digitization and online publication. We find that organizations respond positively to an environment of high consumer digital literacy and sustainable resource allocation that enables slack, skilled staff and long-term strategic planning. Innovation is thus, in fact, enhanced by digital literacy from both producers as well as consumers. |
| Keywords: | innovation; digitization; heritage collections; cultural institution |
| JEL: | O31 Z1 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep1616&r=pay |
| By: | Frik, Alisa; Gaudeul, Alexia |
| Abstract: | We investigate the decision of experimental subjects to incur the risk of revealing personal private information to other participants. We do so by using a novel method to generate personal information that reliably induces privacy concerns in the laboratory. We show that individual decisions to incur privacy risk are correlated with decisions to incur monetary risk. We find that partially depriving subjects of control over the revelation of their personal information does not lead them to lose interest in protecting it. We also find that making subjects think of privacy decisions after financial decisions reduces their aversion to privacy risk. Finally, surveyed attitude to privacy and explicit willingness to pay or to accept payment for personal information correlate well with willingness to incur privacy risk. Having shown that privacy loss can be assimilated to a monetary loss, we compare decisions to incur risk in privacy lotteries with risk attitude in monetary lotteries to derive estimates of the implicit monetary value of privacy. The average implicit monetary value of privacy is about equal to the average willingness to pay to protect private information, but the two measures do not correlate at the individual level. We conclude by underlining the need to know individual attitudes to risk to properly evaluate individual attitudes to privacy as such. |
| Keywords: | privacy,disclosure,risk,control,personal information,experiment |
| JEL: | C91 D81 O30 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:296&r=pay |
| By: | Stephens, Thomas A.; Tyran, Jean-Robert |
| Abstract: | We elicit money illusion and match it with financial and sociodemographic data from official registers on a quasi-representative sample of the Danish population. We find that people who are more prone to money illusion hold more of their gross wealth in nominal assets, including bank deposits and bonds, and less in real assets, including real estate and stocks. This bias is robust to controls for education, income, cognitive ability and other relevant characteristics. We further find that money illusion is a costly bias: 10-year portfolio returns are about 10 percentage points lower for individuals with high money illusion. |
| Keywords: | household finance; loss aversion; Money illusion |
| JEL: | C91 D03 D14 E21 G11 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11643&r=pay |
| By: | Laurent Fournier (Chercheur Indépendant) |
| Abstract: | Élément fondateur d'une économie, l'outil appelé monnaie peut trouver au XXI e siècle une nouvelle définition de protocole grâce à l'Internet et grace à l'usage des smart-phones pour la signature de chèque numérique. Nous proposons ici une formalisation simple d'une économie dont la base monétaire est toujours nulle par construction. Ce protocole préserve mieux les exigences d'équité dans les échanges, et il responsabilise chaque personne face à la gestion de ses propres projets économiques tout au long de sa vie, sans aucun assistanat des banques ni des compagnies d'assurances. Cette monnaie dispose d'une liquidité maximale et des dernières avancées cryptographiques pour sa sécurité. Chacun peut, après déclaration auprès des services d'état civil locaux, procédure assurant l'unicité des comptes sur Internet, utiliser l'application d'ors et déjà disponible gratuitement sur son téléphone portable. |
| Date: | 2016–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01387531&r=pay |
| By: | Bredtmann, Julia (RWI); Martínez Flores, Fernanda (RWI); Otten, Sebastian (RWI) |
| Abstract: | Research on the relationship between high-skilled migration and remittances has been limited by the lack of suitable microdata. We create a unique cross-country dataset by combining household surveys from five Sub-Saharan African countries that enables us to analyze the effect of migrants' education on their remittance behavior. Having comprehensive information on both ends of the migrant-origin household relationship and employing household fixed effects specifications that only use within-household variation for identification allows us to address the problem of unobserved heterogeneity across migrants' origin households. Our results reveal that migrants' education has no significant impact on the likelihood of sending remittances. Conditional on sending remittances, however, high-skilled migrants send significantly higher amounts of money to their households left behind. This effect holds for the sub-groups of internal migrants and migrants in non-OECD countries, while it vanishes for migrants in OECD destination countries once characteristics of the origin household are controlled for. |
| Keywords: | migration, remittances, skill level, brain drain, Sub-Saharan Africa |
| JEL: | F22 F24 O15 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10367&r=pay |
| By: | Philip Gunby (University of Canterbury); Stephen Hickson (University of Canterbury) |
| Abstract: | Economics is at its best when used to shed light on questions of interest to students. Even better if the answers are at odds with commonly held but incorrect views. The velocity of circulation is probably the most neglected concept in macroeconomics classes but it can be used to open up a discussion on the behaviour of people and why demand for money may rise or fall. It can be used to address the question "Is Cash Dead?" Despite the rise in the number of ways that people can pay without using cash, there seems to be no drop in the amount of cash people actually wish to hold. This is a puzzle and a good opportunity to get students thinking about why this might be. |
| Keywords: | Principles of Economics, Velocity of Circulation, Cashless Society |
| JEL: | A22 |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:16/30&r=pay |