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Mobile Access Expansion and Price Information Diffusion : Firm Performance after Ethiopia’s Transition to 3G in 2008 (Inglês)

This paper investigates whether enhanced access to mobile communications, including internet, primarily through smart phones, increases competition as price information is more widely available to customers—both households and firms. The exogenous shock to identify these impacts is the transition from 2G to the 3G broadband network standard in 2008, and the induced changes in the geographic variation across districts of data plan availability for households. The operational mechanism is that better household and firm telecommunications access can close information asymmetry gaps between buyers and sellers, with increased competition leading to improved firm performance. Lower markups and reduced price dispersion can result from better incentives for firms to preserve and grow market share. And as price competition squeezes profit margins, there are more incentives for firms to reduce costs—inducing higher total factor productivity growth. Improved firm performance can generate jobs and economic transformation. Indeed, faster productivity growth, due to enhanced access for buyers to mobile telecommunications, can translate into higher formal employment and wages. One open question is whether the potential competition, driven by the increased mobile telecommunications access of buyers, which help them have the best alternative prices at their fingertips, will also impact export-oriented companies. The prior is that the firm performance improvement effect would be more salient for firms mostly focused on local markets. The primary data sources are manufacturing firm census data and household expenditure survey data across woredas (districts or counties) in Ethiopia. First, the paper investigates the relation between expanded access with the 3G network to price information through mobile phones (measured at the woreda level as share of households with substantive expenditure to access data through smartphones) and firm performance measures (markups, total factor productivity, labor productivity, wage growth, wage gaps and employment growth.), across districts with different shares of mobile telecommunication and data plan penetration subscription. The paper estimates models with difference-in-differences and triple differences. The evidence is consistent with competition intensification after the improvement in access to mobile communication due to the 3G network rollout. In particular, markups were reduced and there was higher growth in productivity, wages, and employment.


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    Abreha,Kaleb Girma, Choi,Jieun, Kassa,Woubet, Kim,Hyun Ju, Kugler,Maurice David

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    Documento de trabalho sobre pesquisa de políticas

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    Africa East,

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  • Nome do documento

    Mobile Access Expansion and Price Information Diffusion : Firm Performance after Ethiopia’s Transition to 3G in 2008

  • Palavras-chave

    firm performance; price information; standard error; total factor productivity growth; marginal productivity of labor; increased investment; productivity-enhancing investment; mobile communication; access to mobile; firm size; information about price; mobile phone communication; labor productivity; capital intensity; information asymmetry; types of firms; behavior of producer; increase in quantity; household survey data; flow of information; access to internet; quality of product; investment in technology; access to infrastructure; intermediate input price; panel data set; labor market trend; natural resource extraction; information communication technology; mobile phone access; local market price; nationally representative survey; average household expenditure; labor force participation; job creation potential; future of work; household expenditure survey; global value chain; public health policy; global market power; broadband network; profit margin; price competition; price dispersion; manufacturing sector; mobile access; time trend; employment growth; production cost; broadband connection; broadband technology; market participation; market competition; mobile telecommunication; employment effect; homogenous good; increased competition; wage growth; transaction cost; exogenous shock; search cost; imported inputs; formal employment; good information; grain price; standard deviation; coffee bean; high employment; labor demand; internet connection; Research Support; market efficiency; supply side; broadband communication; production function; household access; product quality; idiosyncratic error; retail price; knowledge spillover; cellular subscription; communication service; submarine cable; study period; communication services; multimedia service; poor infrastructure; forward linkages; mobile network; market infrastructure; banking service; quantity supply; credit option; grain market; internet service; wage effect; broad access; product information; internet usage; mobile penetration; telecommunication service; telephone line; innovation activity; productivity gain; best practice; early adopter; railway line; mobile service; national monopoly; mobile market; international economics; national ict; ict infrastructure; competitive industry; positive correlation; firm entry; skill profile; digital technology; agricultural market; potential competition; future research; outcome measure; measurement error; yield improvement; positive impact; export status; manufacturing costs; competition increase; significant evidence; regression results; export market; treatment group; differential impact; digital divide; product price; geographical variation; market integration; price behavior; social capital; product market; asymmetric information; product differentiation; industry trade; quoted price; product homogeneity; horizontal differentiation; trade literature; homogeneous products; fixed line; 0 hypothesis; plant size; statistical evidence; estimation strategy; descriptive statistic; available data; Economic Studies; specific intercept; demographic characteristic; household level; raw material; economic study; International Trade; firm productivity; inclusive growth; international competition; network service; formal sector; sectoral impacts; rural market; market performance; fishery sector; downward pressure; total employment; marketing cost; information search; household welfare; remote area; information flow; technology improvement; market distortion; commodity price; census data; output price; agricultural product; network coverage; primary sector; perishable product; network externality; collusive behavior; living standard; financial constraint; price reduction; welfare gains; fishing industry; factor market; household income; african study; market maker; operational mechanism; network expansion; improved information; wage gap; productive efficiency; supply chain; open access; Learning and Innovation Credit; market selection



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