Competition reform and household welfare: A microsimulation analysis of the telecommunication sector in Ethiopia

This paper presents a novel simulation method for estimating the likely welfare effects of policy reforms aimed at increasing competition in strategic economic sectors such as mobile phone services. The proposed method relies on a partial equilibrium simulation approach and estimates the welfare impacts on current consumers and the potential welfare effects among new consumers brought into the market by changes in prices due to competition. This approach is applied to the information and communication technology (ICT) sector in Ethiopia, one of the three countries in the world with a monopoly in the market for mobile phone services. Based on household budget survey data for 2015/16 and departing from a baseline reform scenario that dilutes the market share of the state-owned monopoly to 45 percent, the simulation model estimates a 25.3 percent reduction in the price of mobile services and an increase in 5.7 million new users of mobile services. The predicted drop in prices and increased users would generate a combined relative welfare gain of 1.18 percent (1.09 percent among current users and 0.09 percent among new users), that could be translated into a 0.31 percentage point decline in the national poverty rate and equivalent to lifting about 275,000 people out of poverty. Alternative reform scenarios that dilute the market share of the monopoly to 75 percent and to 30 percent are expected to reduce poverty rate in 0.13 and 0.52 percentage points, respectively. The method proposed in this study represents a useful tool for promoting competition reforms in developing countries, particularly in sectors known for excluding significant segments of the population because of high consumer prices.     

Income and Wealth Inequality in Asia and the Pacific: Trends,Causes, and Policy Remedies

The Asia–Pacific region's rapid growth and poverty reduction in recent decades have been accompanied by rising income and wealth inequality. Technological progress, globalization, deregulation and market-oriented reform, and financialization have generated many new opportunities, but rewarded capital more than labor, benefited skilled workers more than the unskilled, widened spatial inequality, and produced a growing number of the superrich. For some countries, population aging has also contributed to rising inequality. The present paper provides an update on recent trends of income and wealth inequality in the Asia–Pacific region, examines causes behind rising inequality, and discusses policy actions needed to tackle inequality. It also assesses how the COVID-19 has likely worsened inequality in the region.     

Adam Smith's moral foundations of self-interest and ethical social order

This article draws on textual evidence from The Theory of Moral Sentiments and The Wealth of Nations to address mistaken interpretations of Adam Smith's fundamental concept of self-interest as greed that has been said to have had a corrosive influence on markets, commercial behaviour, and widening inequality. To the contrary, Smith's complex set of human motivations, including self-interest, his economic system that is based on free markets, and institutional frameworks governing productive property rights and the rule of law are argued to increase aggregate wealth, improve the position of those least well off, and maintain ethical social order.     

Short and long run democracy diffusion

Does democracy diffuse across borders? If so, how long does it take? Can diffusion cause path dependence, such that if a region is initially democratic (or autocratic), it becomes increasingly so? In this paper I estimate short and long run regional democratic diffusion and account for feedback to and from other countries within the region. Although it is difficult to establish causality, I estimate that when regional democracy in year (t-1) increases, domestic democracy receives or “catches” 40–42% of the increase in the next 5 years, 55–61% in 10 years, and 68–85% in the long run prior to accounting for feedback. When I account for feedback, the average region converges to a unique long-run democracy level regardless of how democratic it is initially. I also provide region-specific and contiguous neighbor estimates, use the model to explain democratization waves, and estimate the alternative V-DEM dataset. In the V-DEM data, democracy diffuses much faster, although the long-run diffusion effects are comparable.     

Farewell Anatolia: Refugees & the rise of the Greek Left

The population exchange of 1923 between Greece and Turkey consolidated the influx of more than 1.5 million refugees from Anatolia and East Thrace into Greece. In this article, we exploit the regional distribution of refugees at the sub-prefectural (province) level as a natural experiment in order to delineate the political effects of what the Greeks call the Asia Minor Catastrophe. We find that the settlement of refugees produced positive persistent effects on the electoral share of left-wing parties in the interwar and postwar periods. This is particularly the case for provinces with a high settlement rate of refugees originating from Asia Minor rather than from East Thrace or the Black Sea region. However, the refugee impact on the left-wing vote disappears completely in the post-dictatorship period.     

Is your netflix a substitute for your telefunken? Evidence on the dynamics of traditional pay TV and OTT in Latin America

Are audiovisual over the top (OTT) services in Latin America substitutes for the traditional Pay TV services (cable or satellite), complementary or independent? To respond to this question, we develop a simple theoretical model based on a CES utility function and estimate simultaneously, using non-linear least squares, demand functions for both audiovisual services. Our results, based on original database covering 17 Latin American countries from 2011 to 2020, suggest no substitution of Pay TV for OTT. However, during the more recent period (2015–2020), we find evidence of gross substitution (i.e., similar enough, although not completely equivalent for consumers) between these audiovisual services. This confirms, although only partially, the existence of the so-called cord-cutting and cord-saving phenomena, due to the expansion of fast internet and the richer OTT offers, and their relatively lower prices. These results suggest regulators should include OTT services in their scope and produce in-depth analysis on the country level to update and optimize regulations, as well as implement regulatory sandboxes to advance towards smart regulation, as shown in the financial industry.