Two decades after the introduction of mobile Internet, a quarter of the world's population remains offline, largely because of high service prices. Shared telecom infrastructure, especially mobile towers, by reducing costs and increasing competition, can help lower prices and accelerate progress toward universal connectivity. We test this hypothesis using data on 107 tower-sharing transactions in 41 developing countries from 2008 to 2020; 56 of these, in 28 countries, covered over 1,000 tower sites and define treatment in a staggered difference-in-differences design. We found that after such a large transaction, the price of the monthly low-usage mobile-voice basket fell 44 percent, roughly $11.9 PPP per month from a 2010 mean of $27.1. The year after the transaction, mobile data prices fell 30 percent, roughly $11.3 PPP per month from a 2013 mean of $37.1. Mobile usage, rural internet access, and internet access in female-headed households increase substantially, suggesting greater digital connectivity and inclusion. We also found that the Herfindahl-Hirschman Index of retail markets drops by 5 percent following a tower-sharing transaction, suggesting increased competition as a driver of the outcomes.
This paper asks when member governance can substitute for external regulation in consumer-owned natural monopolies. Holding quantities fixed, usage-proportional patronage refunds neutralize the transfer motive for monopoly over-pricing, shifting the welfare margin toward operating efficiency. In a principal-agent model, a cooperative board supports and monitors a risk-averse manager under a linear cost-based incentive contract. Regulation reduces the variance of realized operating costs and supports stronger incentives, but it also imposes a compliance burden and displaces the board's own support and monitoring. Exemption therefore raises effort only when burden relief and stronger internal governance outweigh the loss of external information. Welfare dominance further requires the operating-cost gain to cover changes in effort disutility, governance costs, risk-bearing, and the social value of discretion rents. The case for exemption is therefore conditional rather than categorical and supports hybrid oversight that retains regulatory reporting, auditing, and benchmarking while relaxing behavioral constraints.
We analyze a model in which firms compete to develop a technology involving possible accident risks under alternative liability rules (regulation modes). As a benchmark, we first consider a monopoly R&D market in which the monopolist is the sole developer, and obtain an invariance result that the monopolist chooses both the efficient investment in R&D and the efficient investment in its safety under both the strict liability rule and the negligence rule. Then, we consider a patent race model in which the first inventor gets the whole prize (monopoly rent) but is exposed to risks of accidents due to the technology. We show that firms have an incentive to invest for both R&D and safety too much in this patent race game under strict liability. Under negligence rule (regulation-first policy), they still overinvest for R&D but less severely, while they invest for safety efficiently. This model can be applied to regulation of AI innovation posing significant safety challenges.
The rapid advancement of artificial intelligence (AI) relies on a complex supply chain comprising five key layers: hardware, cloud infrastructure, training data, foundation models and AI applications. This paper examines the market structure of each layer and highlights the economic forces shaping them: rapid technological change, high fixed costs, economies of scale, network effects and in some cases, strategic behaviour by dominant firms. We also highlight the expanding influence of big tech companies across the AI supply chain. We discuss the challenges for consumer choice, innovation, operational resilience, cybersecurity and financial stability.
This study investigates quality choices when a product version is outsourced compared to full in-house production of all product versions. Our findings suggest that outsourcing the high-end version leads to improvements in the quality of the low-end version, as the firm seeks to strengthen its bargaining position with the contractor to secure a lower wholesale price for the outsourced high-end version. In situations involving asymmetric information, this effect can help alleviate the downward distortion of low-end quality, thereby enhancing overall welfare. However, outsourcing may also result in a level of low-end quality that exceeds the socially optimal level. The key drivers of this trade-off are the proportion of high-type versus low-type consumers, which determines who is served in the event of a negotiation failure, and the relative bargaining power of firms and contractors, which defines the relative weight of the agreement and disagreement payoffs in setting quality. On the other hand, outsourcing low-end versions is less likely to contribute to social welfare improvement, as it diminishes the quality of the in-house, high-end versions. The study also shows that while outsourcing affects quality choice, the outcomes are largely unaffected by the specifics of outsourcing arrangements and game timing.
