The Estimation Of Network Efficiency And Market Forecasting In China's Telecommunication Market

In this paper we analyze the network effects existing in China telecommunication market and give a forecast of the increasing trend of subscriber base in the market.A model is proposed along with empirical investigation to prove the existence of network effects. Network effects in China telecommunication market are estimated with a dynamic model based on network effects theories. We also try to apply time series model to subscriber base's forecast. Conclusions are drawn that network effects are significant in China telecommunication market, and it plays a key role in market's development, besides pricing strategy's attribution.Highlights in this paper were as follows:(1) Clarified the relationship between network effects and subscriber base in China telecommunication market. Network effects are subject to the scale of subscriber base, price index, and churn rate. We also choose ARPM as a more reasonable variable to use in the empirical analysis;(2) Proposed a dynamic model of network effects in China telecommunication market based on network effects theories;(3) Conclusions drawn through estimation results showed a significant influence of network effects to the development of China telecommunication market. We also try to measure the exact scale of network effects' influence;(4) Constructed a time-series analysis model to forecast the trend of subscriber base in the next few months.