Mobile Technology and Financial Service Bundling: A Structural Estimation of Mobile Money

39 Pages Posted: 1 Aug 2018

See all articles by Yan Dong

Yan Dong

University of South Carolina - Darla Moore School of Business

Sining Song

University of Tennessee, Knoxville - Haslam College of Business

Sriram Venkataraman

University of South Carolina

Yuliang Oliver Yao

Lehigh University

Date Written: July 2018

Abstract

Using a dataset on mobile technologies and mobile money services in the emerging markets from 2000 to 2014, we examine the demand patterns of mobile technologies and mobile money when multiple generations of mobile technologies co-exist in the market and each of the technology may be bundled with mobile money service. Using a structural model, we estimate the own and cross demand elasticities for both mobile technology and mobile money, and the demand effects between mobile money and technologies. We find that the current, dominant technology (i.e., 3G) tends to have more robust demand as compared with other technologies that are either declining (i.e., 1G and 2G) or new to the market (4G), and that customers are more likely to substitute forward towards newer technology than backward towards older technology when the price increases for a technology. We also find that mobile money differentiates the market and mitigates competition for those firms that offer mobile money services. In addition, when the price of services increases, customers tend to substitute backward (i.e., from using mobile money to not using mobile money) as opposed to forward. Theoretical and managerial implications are also discussed.

Keywords: Mobile Money, Mobile Technology, Demand Estimation

Suggested Citation

Dong, Yan and Song, Sining and Venkataraman, Sriram and Yao, Yuliang, Mobile Technology and Financial Service Bundling: A Structural Estimation of Mobile Money (July 2018). Available at SSRN: https://ssrn.com/abstract=3213744 or http://dx.doi.org/10.2139/ssrn.3213744

Yan Dong

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

Sining Song

University of Tennessee, Knoxville - Haslam College of Business ( email )

453 Haslam Business Building
Knoxville, TN 37996-4140
United States

Sriram Venkataraman

University of South Carolina ( email )

701 Main Street
Columbia, SC 29208
United States

Yuliang Yao (Contact Author)

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

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