The evolution of markets under entry and standards regulation - the case of global mobile telecommunication.

Abstract

We analyze the effects of government policies on the evolution of an industry, the global mobile telecommunications market. We find a relatively slow diffusion convergence between countries. This follows partly from regulatory delay in issuing first licenses, yet persisting initial cross-country differences also contribute to a lack of convergence. Introducing competition has a strong immediate impact on diffusion, but a weak impact afterwards; sequential entry is preceded by pre-emptive behavior by incumbents. This is consistent with the presence of consumer switching costs. Setting a single technological standard accelerates the diffusion of analogue technologies considerably; for digital technologies it is too early to draw reliable conclusions, yet the available evidence suggests that setting single standards has similar beneficial effects.Competition; Costs; Effects; Industry; Convergence;