Assessing the value of 3G and 4G network modes in mobile phone pricing

Abstract

PurposeMobile phone network third-generation (3G) and fourth-generation (4G) modes are the most commonly used modes in many developing countries. This study aims to assess the impact of these network modes and other mobile phone attributes on their retail prices in Pakistan, the fifth most populous and developing country.Design/methodology/approachThis study has been conducted in Punjab province, which shares about 53% of the Pakistan’s population. Hedonic price analysis was carried out on all new mobile phone attributes sold in Punjab’s markets at the retail level. Various econometric tests, that is, Ramsey regression equation specification error, Breusch–Pagan/Cook–Weisberg and variance inflation factor, were calculated to check the robustness of the results.FindingsResults of this study indicated that the mobile phone prices were significantly higher for the sets having 4G network mode than the 3G mode. In addition to this, other mobile phone attributes that significantly influenced their prices were brand, weight, camera, random access memory (RAM), memory size, operating system, battery capacity and display size.Research limitations/implicationsThis study has implications for mobile phone sales and marketing strategies of the manufacturers, importers, retailers and others involved in the mobile phone business in developing countries like Pakistan. Mobile phone manufacturers/importers can increase their profits by producing/importing the 4G enabled devices.Originality/valueAlthough many studies in the literature estimated the implicit price of mobile phone attributes, none of these had explicitly assessed the impact of network mode generation of mobile phones on their prices.