Michał Grajek
Selected Publications
Journal Articles
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Regulation and investment in network industries: Evidence from European telecoms
Journal of Law and Economics
- Estimating level effects in diffusion of a new technology: Barcode scanning at the checkout counter Applied Economics 43(14): 1737–1748.
- Estimating network effects and compatibility: Evidence from the Polish mobile market Information Economics and Policy 22(2, May): 130–143.
- Usage and diffusion of cellular telephony, 1998-2004 International Journal of Industrial Organization 27(2, March): 238–249.
- The impact of ISO 9000 diffusion on trade and FDI: A new institutional analysis Journal of International Business Studies 39(4, June): 613–633.
- Gender pay gap in Poland Economics of Planning 36(1): 23–44.
- Prognozy Laczone [Combined forecasts] Przeglad Statystyczny 49(2): 69–81.
Working Papers
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Decomposing first mover advantages in the mobile telecommunications industry
ESMT No. 11-03 (R1)
Subject(s): Economics, Politics & Business Environment, Strategy & General Management, Management Sciences, Decision Sciences & Quantitative Methods, Technology, R&D Management Keyword(s): first‐mover advantage, mobile telecommunications, consumer‐centric, pre‐entry experience, firm pre-entry experience JEL Classification: C51, L10, O33
We study first-mover advantages and organizational pre-entry experience in a market with highly heterogeneous consumers – the global mobile telecoms industry. Specifically, we consider the fact that early consumers will be different from later ones. We suggest that early entrants will attract higher-value consumers, which results in first-mover advantages. This effect will be enhanced if these firms have acquired prior technical experience. Conversely, later, mass-market adopters are attracted by established (domestic) brand names. Our empirical results from the global telecommunications industry support our assertions and provide important insight for the study of first-mover advantages in high-technology industries.
You may download a copy of the original version here.
Published: 2011 -
Estimating critical mass in the global cellular telephony market
ESMT No. 08-004 (R1)
Subject(s): Economics, Politics & Business Environment, Strategy & General Management, Keyword(s): critical Mass, network effects, technology diffusion, cellular telephony JEL Classification: C53, L14, M37
Critical Mass is a common feature of technology diffusion processes. We develop a structural model of demand with network effects to provide a rigorous definition of critical mass as a function of installed base, price and network effects. Using data from the digital cellular telephony market, we identify critical mass phenomena and find that differences in the critical mass point in different countries rest mainly on different countries' socioeconomic characteristics and the extent of competition in a country. This application illustrates that our demand model can be operationalized easily and can generate theoretically grounded empirical insights about critical mass phenomena.
Published: 2010 -
Regulation and investment in network industries: Evidence from European telecoms
ESMT No. 09-004
Forthcoming in Journal of Law and Economics
Subject(s): Economics, Politics & Business Environment, Keyword(s): telecommunications, access regulation, unbundling, investment JEL Classification: C51, L59, L96
We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering 70+ fixed-line operators in 20 countries over 10 years. Our econometric model accommodates: different investment incentives for incumbents and entrants; a strategic interaction of entrants' and incumbents' investments; and endogenous regulation. We find access regulation to negatively affect both total industry and individual carrier investment. Thus promoting market entry by means of regulated access undermines incentives to invest in facilities-based competition. Moreover, we find evidence of a regulatory commitment problem: higher incumbents' investments encourage provision of regulated access.
Published: 2009 -
ISO 9000: New form of protectionism or common language in international trade?
ESMT No. 09-006
Subject(s): Economics, Politics & Business Environment, Keyword(s): international trade, standards, technical trade barriers, ISO 9000, networks JEL Classification: F13, L15, C51
International standards have the potential to both promote and hinder international trade. Yet empirical scholarship on the standards-trade relationship has been held up due to some methodological challenges: measurement problems, varied effects, and endogeneity concerns. We are able to surmount these challenges while considering the impact of one particular standard on the country-pair trade flows between 91 nations over the 1995-2005 period. To deal with these challenges, we measure the degree of standardization via the penetration of ISO 9000 in individual nations, allow ISO diffusion to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) effects, and use instrumental variable and panel data techniques to overcome endogeneity concerns. We find strong evidence in support of ISO 9000 involving a common-language effect that enhances country-pair trade; yet, the evidence is more mixed with regard to the quality-signaling and information/compliance-cost effects. While we find ISO-rich nations (most notably European) to clearly benefit from the worldwide diffusion of standardization, ISO 9000 represents a de facto trade barrier for nations (e.g., the US and Mexico) lagging behind in terms of adoption.
Published: 2009 -
Critical mass
ESMT No. 08-004
Subject(s): Economics, Politics & Business Environment, Keyword(s): critical mass, network effects, diffusion of innovations, compatibility JEL Classification: C53, L14, M37
This paper develops a structural model of demand for a network good to provide a rigorous definition of critical mass. Using simulations, we demonstrate that our model of critical mass can be operationalized easily and can generate theoretically grounded insights about critical mass phenomena identified in empirical settings. We then propose a number of extensions to illustrate the flexibility of our model.
This working paper has been revised, ESMT-08-004(R1), under the new title Estimating Critical Mass in the Global Cellular Telephony Market.
Published: 2008 -
Usage and diffusion of cellular telephony, 1998-2004
ESMT No. 07-003
Published in International Journal of Industrial Organization 27(2): 238-249.
Subject(s): Economics, Politics & Business Environment, Keyword(s): cellular telephony, diffusion, usage intensity, network effects, consumer heterogeneity, fixed-mobile substitutability JEL Classification: L1, L52, O38
We study the dynamics of usage intensity of second-generation cellular telephony over the diffusion curve. Specifically, we address two questions: First, can we draw conclusions about the underlying drivers of technology diffusion by studying usage intensity? Second, what is the effect of high penetration of previous generations and competing networks on network usage intensity? Using an operator-level panel covering 41 countries with quarterly data over 6 years, we find that heterogeneity among adopters dominates network effects and that different technological generations are complements in terms of usage, but substitutes in terms of subscription.
Published: 2007 -
Estimating network effects and compatibility in mobile telecommunications
ESMT No. 07-001
Published in Information Economics and Policy 22(2): 130-143.
Subject(s): Economics, Politics & Business Environment, Keyword(s): structural econometric model, network effects, compatibility, mobile telecommunications JEL Classification: C51, D12, L96I develop a structural demand model for mobile telephone service, which facilitates the identification of network effects and compatibility between networks. Network effects are measured by the dependence of consumer willingness to pay on the installed base of subscribers. Compatibility is measured by the relative extent of cross- and own-network effects. I then estimate the model using quarterly panel data from the Polish mobile telephone industry from 1996-2001 and find strong network effects and - despite full interconnection of the mobile telephone networks - low compatibility. I also show that ignoring network effects leads to an overestimation of elasticity of demand.
Published: 2007 -
Estimating level effects in diffusion of a new technology: Barcode scanning at the checkout counter
ESMT No. 07-002
Published in Applied Economics 43(14): 1737–1748.
Subject(s): Economics, Politics & Business Environment, Keyword(s): diffusion, information technology, retail competition JEL Classification: L5, L81, O33
Cross-country or cross-industry studies of technology diffusion typically estimate how independent factors affect diffusion speed or timing, often based on a two-stage approach. In many applications, however, countries (industries) differ most in the saturation level of diffusion. In a novel, single-stage econometric approach to a standard diffusion model, we therefore estimate how the saturation level co-varies with independent factors. In our application to diffusion of an important retail information technology, we focus on the competitive effect of hypermarkets (superstores). We also find standard scale, income and labor substitution effects.
Published: 2007
White Papers
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Assessment of a sustainable Internet model for the near future
ESMT No. WP-11-01
Subject(s): Economics, Politics & Business Environment, Keyword(s): Internet business models, net neutrality, impact assessment
The increasing demand for bandwidth due to data-intense applications, the convergence of various digital communication technologies as well as the increasing commercial importance of the Internet has given rise to one of the most important questions in the coming years: whether and how the Internet economic model needs to evolve and what role regulation should play in this process. Net neutrality regulation, if and when formally implemented in some shape or form, has the potential to reallocate resources among industry participants, affect optimal pricing strategies and ultimately impact investment and innovation incentives. Through these effects, the regulatory framework is going to affect which business models will be at all feasible, which are going to thrive, and which will become obsolete.
The report derives and analyzes some likely future business models with a view to sustainability in terms of ability to accommodate increasing traffic volumes and social welfare implications. Based on these assessments the regulatory implications are discussed for each business model.
The stylized business models each focus on a different aspect: the "Congestion-Based Model" stresses the possibility to tackle congestion problems through congestion-based pricing. The "Best Effort Plus" preserves the traditional best effort network but gives ISPs more leeway with innovative services. The "Quality Classes - Content Pays" stresses the observed need of different applications for various degrees of quality of service. The "Quality Classes - User Pays" model, however, puts the focus on consumer choice for higher quality levels.Published: 2011 -
Analyzing the relationship between regulation and investment in the telecom sector
ESMT No. WP-108-01
Subject(s): Economics, Politics & Business Environment, Keyword(s): telecommunications, access regulation, unbundling, investment, European Union JEL Classification: C51, L59, L96
This study analyses the relationship between entry regulation and infrastructure investment in the telecommunication sector. The empirical analysis we conduct is based on a comprehensive data set covering 180 fixed-line and mobile operators in 25 European countries over 10 years and employs a newly created indicator measuring regulatory intensity in the European countries. We carefully treat the endogeneity problem of regulation by applying instrumental variables and find that tough entry regulation (e.g. unbundling) discourages infrastructure investment by entrants but has no effect on incumbents in fixed-line telecommunications. We do not find significant impact of entry regulation on investment in mobile telephony.
Published: 2008 -
Beurteilung eines nachhaltigen Internet-Modells für die nahe Zukunft
ESMT No. BB-11-02/ger
Subject(s): Economics, Politics & Business Environment, Keyword(s): Internet business models, net neutrality, impact assessment
Der steigende Bandbreitenbedarf aufgrund datenintensiver Anwendungen, die Konvergenz verschiedenster digitaler Kommunikationstechnologien sowie die zunehmende kommerzielle Bedeutung des Internet werfen eine der wichtigsten Fragen der kommenden Jahre auf: ob und wie sich das Wirtschaftsmodell des Internet weiterentwickeln muss und welche Rolle der Regulierung in diesem Zusammenhang zukommen sollte. Die Vor- und Nachteile einer Netzneutralitätsregulierung im US-amerikanischen Kontext werden gegenwärtig in den USA - unter Teilnahme führender Wissenschaftler - intensiv debattiert. In Europa gab es zu dem in diesem Zusammenhang eingeleiteten Konsultationsverfahren der Europäischen Kommission in der zweiten Hälfte von 2010 über 300 Stellungnahmen, was das lebhafte Interesse von politischen Entscheidungsträgern und Regulatoren, Wirtschaftsvertretern und der allgemeinen Öffentlichkeit an diesem Thema unter Beweis stellt. Was jedoch fehlt, ist eine eingehende Analyse der Auswirkungen einer Netzneutralitätsregulierung auf potenzielle Internet-Geschäftsmodelle, bei der die verschiedenen Marktbedingungen in Europa, und darunter insbesondere die europäische Zugangsregulierung, berücksichtigt werden.
Published: 2011 -
Assessment of a sustainable Internet model for the near future
ESMT No. BB-11-01
Subject(s): Economics, Politics & Business Environment, Keyword(s): Internet business models, net neutrality, impact assessment
The increasing demand for bandwidth due to data-intense applications, the convergence of various digital communication technologies as well as the increasing commercial importance of the Internet has given rise to one of the most important questions in the coming years: whether and how the Internet economic model needs to evolve and what role regulation should play in this process. An extensive debate in the US - including contributions by distinguished scholars - has been looking at the pros and cons of net neutrality regulation in the US context. Also in Europe, the European Commission's consultation process in the second half of 2010, which resulted in over 300 responses, shows the vivid interest of policy makers and regulators, industry, and the general public on that matter. However, what is missing is a thorough analysis of the implications of net neutrality regulation on some possible Internet business models adapted to the different market conditions in Europe, foremost European access regulation.
In this context, ESMT Competition Analysis analyzes the interaction between different net neutrality regulations and Internet business models. Net neutrality regulation, if and when formally implemented in some shape or form, has the potential to reallocate resources among industry participants, affect optimal pricing strategies, and ultimately impact investment and innovation incentives. Through these effects, the regulatory framework is going to affect which business models will be at all feasible, which are going to thrive, and which will become obsolete. The report derives and analyzes some likely future business models with a view to sustainability in terms of the ability to accommodate increasing traffic volumes and social welfare implications. Based on these assessments, the regulatory implications are discussed for each business model.Published: 2011 - Mehr Handel dank Gütesiegel (ISO 9000 and Trade) WZB-Mitteilung 115: 41-43
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