Mobile Money and Mobile Technologies: A Structural Estimation

Using a data set on mobile technologies and mobile money 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 coexist in the market and each generation of the technologies may be bundled with mobile money. Using a structural model, we estimate the own and cross price elasticities for both mobile technologies and mobile money, and the demand effects between mobile money and mobile 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 (i.e., 4G), and that customers are more likely to substitute forward toward newer technologies than backward toward older technologies 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. Theoretical and managerial implications are also discussed.