Problems in Launching the Mobile Internet: Evidence From a Pricing Experiment

Maija Gao, Ari Hyytinen, Otto Toivanen

Research output: Contribution to journalArticleScientificpeer-review

1 Citation (Scopus)

Abstract

Commercialization of innovations frequently stumbles. A prominent recent example are the early (i.e., pre-3G) mobile phone-enabled Internet services, whose European take-up was slower than expected. To determine why, we build a structural model of demand for such services and estimate it using consumer-level panel data from a pricing experiment. The experiment allows a decomposition of the number of wireless connections into the number of needs-instances where a consumer would establish a connection if the price were zero-and the conditional probability of establishing a connection. We find that needs were plenty and potential consumer surplus several magnitudes higher than that attained. We find that pricing reduced usage substantially and explore potential reasons for the high prices.

Original languageEnglish
Peer-reviewed scientific journalJournal of Economics and Management Strategy
Volume23
Issue number3
Pages (from-to)483-506
Number of pages24
ISSN1058-6407
DOIs
Publication statusPublished - 10.07.2014
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics

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