Welfare Effects of Introducing Competition in the Telecom Sector in Djibouti

17 Pages Posted: 9 May 2019 Last revised: 17 May 2019

See all articles by Xavier Stephane Decoster

Xavier Stephane Decoster

World Bank

Gabriel Lara Ibarra

The World Bank - Poverty and Equity Global Practice

Vibhuti Mendiratta

World Bank - Poverty and Equity Global Practice

Marco Santacroce

World Bank

Date Written: May 7, 2019

Abstract

Djibouti is very well placed, as a landing site of undersea fiber optic cables, to benefit from the digital economy. However, the prevalence of a single national telecom operator in the country has stifled service delivery and innovation in the telecom sector. Mobile broadband coverage and access to internet in Djibouti in 2018 remains below that of many Sub-Saharan African countries. This paper simulates the impact of the introduction of competition on the telecom sector's prices and its implications for households' welfare. The analysis finds important gains in welfare among current users of telecom services, with the largest gains going to the richest households. On the extensive margin, the analysis also finds a higher likelihood of take up of telecom services across the consumption distribution but skewed toward the rich. More work is needed to understand the implications of changes in the telecom sector, especially as greater access may lead to more unequal access, at least in the short term.

Keywords: Information Technology, Inequality, Telecommunications Infrastructure

Suggested Citation

Decoster, Xavier Stephane and Lara Ibarra, Gabriel and Mendiratta, Vibhuti and Santacroce, Marco, Welfare Effects of Introducing Competition in the Telecom Sector in Djibouti (May 7, 2019). World Bank Policy Research Working Paper No. 8850. Available at SSRN: https://ssrn.com/abstract=3384387

Xavier Stephane Decoster (Contact Author)

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Gabriel Lara Ibarra

The World Bank - Poverty and Equity Global Practice ( email )

1818 H St NW
Washington, DC 20433
United States

Vibhuti Mendiratta

World Bank - Poverty and Equity Global Practice ( email )

1818 H Street, NW
Washington, DC 20433
United States

Marco Santacroce

World Bank

1818 H Street, NW
Washington, DC 20433
United States

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