Details

Author

• Araar, Abdelkrim [Browse]
• Granguillhome Ochoa, Rogelio [Browse]
• Malasquez, Eduardo A. [Browse]

Series

• Policy research working papers [More in this series]
• World Bank e-Library [More in this series]

Summary note

This paper presents a novel method for estimating the likely welfare effects of competition reforms for both current and new consumers. Using household budget survey data from 2015/16 for Ethiopia and assuming a reform scenario that dilutes the market share of the telecommunications state-owned monopoly to 45 percent, the model predicts a 25.3 percent reduction in the price of mobile services and an increase of 4.6 million new users of mobile phone services. This reform is expected to generate a welfare gain of 1.37 percent among all consumers. Poverty rates are expected to decline by 0.31 percentage point, driven by a reduction of 0.22 percentage point for current consumers and 0.09 percentage point among new users. Inequality would increase by 0.23 Gini point since better-off consumers are more likely to reap the benefits of greater competition. This method represents a powerful tool for supporting the analysis of competition reforms in developing countries, particularly in sectors known for excluding significant segments of the population due to high consumer prices.

Other standard number

• 10.1596/1813-9450-9516