Abstract This paper presents a first estimation of the tourist test threshold for interchange fees that makes Peruvian small merchants indifferent between accepting cash and debit cards at the point of sale. We use the tourist test model (initially proposed by Rochet and Tirole), including tax evasion (Aurazo and Vasquez’s model) as an extra factor in the merchants’ decision between cash and card payments. Also, we revisit the existing empirical approaches and propose a new empirical approach, coined as the cash-flow approach, which assumes that small merchants estimate the overall cost in terms of the average ticket related to cash and card payments. Using a Survey on private costs of payment instruments conducted by the Central Reserve Bank of Peru in 2019, our estimates suggest that the tourist test threshold for debit cards is lower than the current interchange fee until 2019, even if tax evasion is not considered. Also, this study helps policymakers to better understand the factors around the merchants’ decision that may be considered to foster digital payments.
{"title":"Card Acceptance by Small Merchants: An Application of the Tourist Test to Peru","authors":"José Aurazo, Milton Vega","doi":"10.1515/rne-2021-0024","DOIUrl":"https://doi.org/10.1515/rne-2021-0024","url":null,"abstract":"Abstract This paper presents a first estimation of the tourist test threshold for interchange fees that makes Peruvian small merchants indifferent between accepting cash and debit cards at the point of sale. We use the tourist test model (initially proposed by Rochet and Tirole), including tax evasion (Aurazo and Vasquez’s model) as an extra factor in the merchants’ decision between cash and card payments. Also, we revisit the existing empirical approaches and propose a new empirical approach, coined as the cash-flow approach, which assumes that small merchants estimate the overall cost in terms of the average ticket related to cash and card payments. Using a Survey on private costs of payment instruments conducted by the Central Reserve Bank of Peru in 2019, our estimates suggest that the tourist test threshold for debit cards is lower than the current interchange fee until 2019, even if tax evasion is not considered. Also, this study helps policymakers to better understand the factors around the merchants’ decision that may be considered to foster digital payments.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"34 1","pages":"101 - 137"},"PeriodicalIF":0.7,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82622601","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Digital technologies like the Internet can affect income inequality through increased demand for employment in manual and abstract jobs and reduced demand for employment in routine jobs. In this paper, we combine city-level income distribution and jobs data with broadband data from France to investigate the impact of broadband Internet access on income inequality. Using an instrumental variable estimation strategy, we find that broadband Internet reduces income inequality through increased employment in manual jobs. These effects increase with the availability of skilled workers and are significant in cities with a large service sector or high-speed Internet access. Further, the diffusion of broadband Internet comes with relatively greater benefits in low-income cities compared to high-income cities. Several robustness checks support these findings.
{"title":"Broadband Internet and Income Inequality","authors":"G. V. Houngbonon, Julienne Liang","doi":"10.1515/rne-2020-0042","DOIUrl":"https://doi.org/10.1515/rne-2020-0042","url":null,"abstract":"Abstract Digital technologies like the Internet can affect income inequality through increased demand for employment in manual and abstract jobs and reduced demand for employment in routine jobs. In this paper, we combine city-level income distribution and jobs data with broadband data from France to investigate the impact of broadband Internet access on income inequality. Using an instrumental variable estimation strategy, we find that broadband Internet reduces income inequality through increased employment in manual jobs. These effects increase with the availability of skilled workers and are significant in cities with a large service sector or high-speed Internet access. Further, the diffusion of broadband Internet comes with relatively greater benefits in low-income cities compared to high-income cities. Several robustness checks support these findings.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"54 1","pages":"55 - 99"},"PeriodicalIF":0.7,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73043390","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Disclosure programs can help consumers with limited information about product quality make better purchase decisions. A quality disclosure mandate such as the On-Time Disclosure Rule in the U.S. that requires airlines to provide information on the quality of their products can be beneficial, but can also be counterproductive if it encourages airlines to act deceptively by “gaming” the system. If airlines care about public perceptions of their on-time record, they have an incentive to improve their on-time performance ranking by resorting to unscrupulous means such as padding their schedules beyond normal time required to absorb scheduling stochastic fluctuations. This study investigates the impact of competition on airline schedule padding. We construct a measure for schedule padding under different optimal flight time choices. Using different measures of market structure, we find that more competitive (concentrated) markets are subject to less (more) schedule padding.
信息披露项目可以帮助消费者在产品质量信息有限的情况下做出更好的购买决策。像美国的准时披露规则(on - time disclosure Rule)要求航空公司提供有关其产品质量的信息，这可能是有益的，但如果它鼓励航空公司通过“玩弄”系统来欺骗自己，也可能适得其反。如果航空公司关心公众对其准点率记录的看法，他们就有动力通过不择手段的手段来提高准点率排名，比如将航班时间延长到正常时间之外，以吸收航班的随机波动。本研究旨在探讨竞争对航空公司时间表填充的影响。在不同的最优飞行时间选择下，构造了一个航班填充度量。使用不同的市场结构度量，我们发现更具竞争性(集中度)的市场受制于更少(更多)的时间表填充。
{"title":"Competition and Schedule Padding in the US Airline Industry","authors":"Jules O. Yimga","doi":"10.1515/rne-2021-0016","DOIUrl":"https://doi.org/10.1515/rne-2021-0016","url":null,"abstract":"Abstract Disclosure programs can help consumers with limited information about product quality make better purchase decisions. A quality disclosure mandate such as the On-Time Disclosure Rule in the U.S. that requires airlines to provide information on the quality of their products can be beneficial, but can also be counterproductive if it encourages airlines to act deceptively by “gaming” the system. If airlines care about public perceptions of their on-time record, they have an incentive to improve their on-time performance ranking by resorting to unscrupulous means such as padding their schedules beyond normal time required to absorb scheduling stochastic fluctuations. This study investigates the impact of competition on airline schedule padding. We construct a measure for schedule padding under different optimal flight time choices. Using different measures of market structure, we find that more competitive (concentrated) markets are subject to less (more) schedule padding.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"2 1","pages":"1 - 33"},"PeriodicalIF":0.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85073838","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In this paper, we analyze how fixed-mobile (quadruple-play) bundling impacts the decision of consumers to churn telecommunications services. We use a database from an European operator of fixed and mobile telecommunications services which includes information about 9.6 million fixed broadband subscribers and 14.2 million mobile subscribers between March 2014 and February 2015. These data is combined with socio-demographic characteristics from each municipality in this country. We find that consumers who bundle fixed and mobile services from the same provider are less likely to churn. Without fixed-mobile bundling the annual churn of fixed broadband consumers would increase from 8.4 to 9.2%. Furthermore, the consumer churn in the mobile market would increase from 11.5 to 13.1%. We conclude that in the current competitive environment in the country considered, bundling has a moderate impact on consumer retention on both fixed and mobile networks.
{"title":"Bundling and Consumer Churn in Telecommunications Markets","authors":"L. Grzybowski, Julienne Liang, Christine Zulehner","doi":"10.1515/rne-2021-0032","DOIUrl":"https://doi.org/10.1515/rne-2021-0032","url":null,"abstract":"Abstract In this paper, we analyze how fixed-mobile (quadruple-play) bundling impacts the decision of consumers to churn telecommunications services. We use a database from an European operator of fixed and mobile telecommunications services which includes information about 9.6 million fixed broadband subscribers and 14.2 million mobile subscribers between March 2014 and February 2015. These data is combined with socio-demographic characteristics from each municipality in this country. We find that consumers who bundle fixed and mobile services from the same provider are less likely to churn. Without fixed-mobile bundling the annual churn of fixed broadband consumers would increase from 8.4 to 9.2%. Furthermore, the consumer churn in the mobile market would increase from 11.5 to 13.1%. We conclude that in the current competitive environment in the country considered, bundling has a moderate impact on consumer retention on both fixed and mobile networks.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"9 1","pages":"35 - 54"},"PeriodicalIF":0.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78809260","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper appeals to the interplay between network effects and quality to justify the use of planned obsolescence by well-settled firms. We propose a simple contagion model to analyze an asymmetric duopoly market where an incumbent firm benefits, at least initially, from the first‐mover advantages attributed to network industries, while the entrant offers a product with higher quality. The simpler version of the model describes the evolution of the market shares, showing that network effects can overtake the quality effect if the market is sufficiently small. If the market lasts enough, network effects end up enhancing the effect of quality and the entrant gets a higher market share. If the incumbent can set the size of the market by launching a new product every so often, the model provides a rationale for the use of planned obsolescence from a strategic point of view. Social efficiency is then challenged.
{"title":"Planned Obsolescence with Network Effects","authors":"Ó. Gutiérrez","doi":"10.1515/rne-2020-0053","DOIUrl":"https://doi.org/10.1515/rne-2020-0053","url":null,"abstract":"Abstract This paper appeals to the interplay between network effects and quality to justify the use of planned obsolescence by well-settled firms. We propose a simple contagion model to analyze an asymmetric duopoly market where an incumbent firm benefits, at least initially, from the first‐mover advantages attributed to network industries, while the entrant offers a product with higher quality. The simpler version of the model describes the evolution of the market shares, showing that network effects can overtake the quality effect if the market is sufficiently small. If the market lasts enough, network effects end up enhancing the effect of quality and the entrant gets a higher market share. If the incumbent can set the size of the market by launching a new product every so often, the model provides a rationale for the use of planned obsolescence from a strategic point of view. Social efficiency is then challenged.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"102 1","pages":"221 - 247"},"PeriodicalIF":0.7,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75803396","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper examines the effect of mobile number portability (MNP) on own- and cross-price elasticities. We use quarterly data for 27 mobile operators in seven Sub-Saharan Africa countries between 2010Q4 and 2014Q4 to estimate a differentiated products demand model. We find that the implementation of MNP increases price elasticities of demand for mobile services. This increase in price elasticities may be a result of reduction in switching costs between operators. On average, the introduction of MNP increases own-price elasticities by 0.47 in absolute value. We compare the level of price elasticities before and after the implementation of MNP in Ghana and Kenya, which implemented this policy in the time period of our study. Our results suggest that in Ghana, MNP increased own-price elasticities by an average of 0.35 in absolute term from an average of −0.74. In Kenya, the introduction of MNP increased own-price elasticities by an average of 0.21 in absolute term from a lower average of −0.39. However, we find that the average own-price elasticities in Kenya and Ghana remained small even after the implementation of MNP relative to other countries without MNP in place.
{"title":"The Impact of Mobile Number Portability on Demand Price Elasticities in Sub-Saharan African Countries","authors":"Onkokame Mothobi","doi":"10.1515/rne-2020-0023","DOIUrl":"https://doi.org/10.1515/rne-2020-0023","url":null,"abstract":"Abstract This paper examines the effect of mobile number portability (MNP) on own- and cross-price elasticities. We use quarterly data for 27 mobile operators in seven Sub-Saharan Africa countries between 2010Q4 and 2014Q4 to estimate a differentiated products demand model. We find that the implementation of MNP increases price elasticities of demand for mobile services. This increase in price elasticities may be a result of reduction in switching costs between operators. On average, the introduction of MNP increases own-price elasticities by 0.47 in absolute value. We compare the level of price elasticities before and after the implementation of MNP in Ghana and Kenya, which implemented this policy in the time period of our study. Our results suggest that in Ghana, MNP increased own-price elasticities by an average of 0.35 in absolute term from an average of −0.74. In Kenya, the introduction of MNP increased own-price elasticities by an average of 0.21 in absolute term from a lower average of −0.39. However, we find that the average own-price elasticities in Kenya and Ghana remained small even after the implementation of MNP relative to other countries without MNP in place.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"291 1","pages":"249 - 268"},"PeriodicalIF":0.7,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86605702","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper considers the organization of a single (domestic) payment system. When card issuers that are members of a payment system set their fees individually, this gives rise to a free-riding problem, as in providing access to different customers, card issuers are complements from the perspective of each merchant. When payment systems can threaten to exclude, in particular, card issuers with a smaller customer base that do not adhere to a common cap on fees, this allows to restore the full internalization outcome, leading to lower fees but higher profits and higher welfare. When payment systems cannot threaten to exclude card issuers, the full internalization outcome arises only when card issuers are sufficiently symmetric.
{"title":"Payment System Self-Regulation through Fee Caps","authors":"Griem Fabian","doi":"10.1515/RNE-2020-0015","DOIUrl":"https://doi.org/10.1515/RNE-2020-0015","url":null,"abstract":"This paper considers the organization of a single (domestic) payment system. When card issuers that are members of a payment system set their fees individually, this gives rise to a free-riding problem, as in providing access to different customers, card issuers are complements from the perspective of each merchant. When payment systems can threaten to exclude, in particular, card issuers with a smaller customer base that do not adhere to a common cap on fees, this allows to restore the full internalization outcome, leading to lower fees but higher profits and higher welfare. When payment systems cannot threaten to exclude card issuers, the full internalization outcome arises only when card issuers are sufficiently symmetric.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"62 1","pages":"141-167"},"PeriodicalIF":0.7,"publicationDate":"2020-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73513480","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper analyzes the effects of direct interconnection agreements in the Internet backbone on content quality investment for content providers (CPs). The model assumes that when the Internet service provider (ISP) has a vertical affiliation with one CP, the ISP directly interconnects the affiliated CP’s traffic to its network for free while collecting a direct interconnection fee from the unaffiliated CP. If the unaffiliated CP’s traffic is indirectly interconnected to the ISP’s network via a third party transit provider, its network quality is lower than that via a direct interconnection. For the CPs’ content quality investments, I find that the affiliated CP invests more in content when the rival indirectly interconnects, leading to a higher total level of content investment. Accordingly, there is a condition under which the ISP does not want to offer direct interconnection to the unaffiliated CP. However, consumers are not always worse off from this interconnection foreclosure. Thus, the regulation of a paid direct interconnection does not necessarily enhance welfare in terms of consumer surplus.
摘要本文分析了互联网骨干网中直接互联协议对内容提供商(CPs)内容质量投资的影响。该模型假设，当ISP (Internet service provider)与某一家CP垂直隶属时，该ISP将隶属CP的流量免费直接接入其网络，同时向非隶属CP收取直接对接费用。如果非隶属CP的流量通过第三方传输提供商间接接入该ISP的网络，其网络质量会低于直接对接。对于CPs的内容质量投资，我发现当竞争对手间接互联时，附属CP对内容的投资更多，导致内容投资的总水平更高。因此，存在一个条件，即ISP不希望向无关联的CP提供直接互连。然而，消费者并不总是因为这种互连丧失抵押品赎回权而受到损害。因此，就消费者剩余而言，对付费直接互联的监管不一定会提高福利。
{"title":"Direct Interconnection and Investment Incentives for Content Quality","authors":"Soo Jin Kim","doi":"10.1515/rne-2020-0013","DOIUrl":"https://doi.org/10.1515/rne-2020-0013","url":null,"abstract":"Abstract This paper analyzes the effects of direct interconnection agreements in the Internet backbone on content quality investment for content providers (CPs). The model assumes that when the Internet service provider (ISP) has a vertical affiliation with one CP, the ISP directly interconnects the affiliated CP’s traffic to its network for free while collecting a direct interconnection fee from the unaffiliated CP. If the unaffiliated CP’s traffic is indirectly interconnected to the ISP’s network via a third party transit provider, its network quality is lower than that via a direct interconnection. For the CPs’ content quality investments, I find that the affiliated CP invests more in content when the rival indirectly interconnects, leading to a higher total level of content investment. Accordingly, there is a condition under which the ISP does not want to offer direct interconnection to the unaffiliated CP. However, consumers are not always worse off from this interconnection foreclosure. Thus, the regulation of a paid direct interconnection does not necessarily enhance welfare in terms of consumer surplus.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"34 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2020-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138540309","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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