The Impact of Mobile Number Portability on Demand Price Elasticities in Sub-Saharan African Countries

Abstract

Abstract This paper examines the effect of mobile number portability (MNP) on own- and cross-price elasticities. We use quarterly data for 27 mobile operators in seven Sub-Saharan Africa countries between 2010Q4 and 2014Q4 to estimate a differentiated products demand model. We find that the implementation of MNP increases price elasticities of demand for mobile services. This increase in price elasticities may be a result of reduction in switching costs between operators. On average, the introduction of MNP increases own-price elasticities by 0.47 in absolute value. We compare the level of price elasticities before and after the implementation of MNP in Ghana and Kenya, which implemented this policy in the time period of our study. Our results suggest that in Ghana, MNP increased own-price elasticities by an average of 0.35 in absolute term from an average of −0.74. In Kenya, the introduction of MNP increased own-price elasticities by an average of 0.21 in absolute term from a lower average of −0.39. However, we find that the average own-price elasticities in Kenya and Ghana remained small even after the implementation of MNP relative to other countries without MNP in place.