Tele-Communications 2.0: The Age of the Internet
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Vahagn Jerbashian
und
Anna Kochanova
Abstract
Over the past few decades, the Internet has become the major tool for communication, greatly replacing the traditional telecommunication technologies. We use industry-level evidence from 21 European countries and the period 1997–2007 and identify the changing effects of traditional telecommunication technologies and the Internet on the functioning of markets. Specifically, we show that the effect of the traditional telecommunication technologies on competition in services and goods markets has dissipated and has become insignificant during this period. In contrast, the effect of the Internet has gained a significant momentum.
Funding statement: Vahagn Jerbashian gratefully acknowledges the financial support by the Spanish Ministry of Education and Science under Grant ECO2012-34046; the Generalitat of Catalonia under Grant 2014SGR493; and the Grant Agency of the Czech Republic under Project P402/12/G097.
Acknowledgements
We would like to thank an anonymous referee, Fernando Sanchez-Losada, and the participants at the Armenian Economic Association Meetings in Yerevan (2018) for thoughtful comments. All errors remain our own.
References
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A Data Appendix
Summary statistics
| Panel A Country-year-level variables | |||||
|---|---|---|---|---|---|
| Panel A.1 Sample period 1997–2007 | Obs | Mean | SD | Min | Max |
| Diffusion of Telecommunications | 231 | 0.36 | 0.49 | ||
| Diffusion of the Internet | 231 | 1.21 | |||
| Correlation | 0.83*** | ||||
| Panel A.2 Sample period 1997–2000 | |||||
| Diffusion of Telecommunications | 84 | 0.38 | 0.18 | ||
| Diffusion of the Internet | 84 | 1.28 | |||
| Correlation | 0.80*** | ||||
| Panel A.3 Sample period 2001–2007 | |||||
| Diffusion of Telecommunications | 147 | 0.15 | 0.16 | 0.49 | |
| Diffusion of the Internet | 147 | 0.67 | |||
| Correlation | 0.49*** | ||||
| Panel B Industry-country-year-level variables | Obs | Mean | SD | Min | Max |
| Price cost margin | 9413 | 0.18 | 0.12 | 0.02 | 0.71 |
| Industry share | 9413 | 0.02 | 0.03 | 0.00 | 0.32 |
| Panel C Industry-level variables | Obs | Mean | SD | Min | Max |
| Dependence | 47 | 0.01 | 0.01 | 0.00 | 0.05 |
Note: This table reports basic statistics for the variables. In addition to the basic statistics, Panel A offers the correlation between the Diffusion of Telecommunications and the Diffusion of the Internet for the entire sample period and for the periods 1997–2000 and 2001–2007. *** indicates significance at the 1% level.
Definitions and sources of variables
| Variable name | Definition and source |
|---|---|
| Competition | Price cost margin averaged over 3-year forward rolling window for each sample year. Price cost margin is the empirical analog of the Lerner index. It is defined as the ratio of the difference between output and labor and intermediate costs, on the one hand, and output, on the other [i.e. (Output – Labor and Intermediate Input Costs)/Output]. |
| Dependence | The share of expenditures on telecommunications out of total expenditures on intermediate inputs in US industries averaged over the sample period. |
| Diffusion of Telecommunications | The logarithm of the number of fixed-line and mobile telephone subscribers minus the number of (fixed line) Internet subscribers per capita. |
| Diffusion of the Internet | The logarithm of the number of (fixed-line) Internet subscribers per capita. |
| Industry share | The ratio of output in an industry in a country to the total (business) output in the country. |
Sample countries are Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the UK; sample industries (ISIC rev. 3.1) are 10, 11, 13–36, 40, 41, 45, 50–52, 55, 60–63, 65–67, 70–74, 92, and 93; and sample period is 1997–2009.
Data Sources:Jerbashian and Kochanova (2017) and BEA, ITU, and OECD STAN.
© 2018 Walter de Gruyter GmbH, Berlin/Boston
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Artikel in diesem Heft
- Teacher Turnover, Composition and Qualifications in the Year-Round School Setting
- Self–Employment, Wealth and Start–up Costs: Evidence from a Financial Crisis
- Local Information, Income Segregation, and Geographic Mobility
- Leadership in Tax Competition with Fiscal Equalization Transfers
- Measuring the Deterrent Effect of European Cartel Law Enforcement
- Widowhood and Retirement Timing: Evidence from the Health and Retirement Study
- Guaranteed Nonlabor Income and Labor Supply: The Effect of the Alaska Permanent Fund Dividend
- Do State Sales Taxes Crowd Out Local Option Sales Taxes?
- Social Network Structure and Risk Sharing in Villages
- Tele-Communications 2.0: The Age of the Internet
- Number of Bidders and the Winner’s Curse
