Network Effects:the Case of Switzerland’s Mobile Telephony

Abstract

The goal of this paper is to investigate if there is some evidence of network effects in the mobile telephony of Switzerland. In order to do that, we exploit two kinds of information. First, we explore information about some economic variables related to the telecom industry, such as market shares, prices, the length and frequency of on and off-net calls. Second, we use the information of a survey made among students at the University of Lausanne about their attitudes and behavior with regard to mobile phones. In line with the economic literature on telecommuncations, we found the evidence of network effects in the mobile telephony industry. We found that in the case of Switzerland, the network effect is induced by the operators, as it is the case for other countries. The analysis of the survey results provided us with the evidence that people tend to coordinate their choice of the mobile operator according to the price strategies implemented by the operators.+