A large body of theoretical literature has been recently produced about two-sided markets (e.g. Armstrong (2005), Rochet and Tirole (2003)). Yet very little empirical research has followed. This paper provides the first application of two-sided markets theories to the analysis of communication infrastructure development in Sub-Saharan Africa (SSA). The paper highlights that the relative pricing currently applied to each side of postal communication platforms (i.e. senders and recipients) prevents indirect positive network externalities from arising in the long run, thereby jeopardizing the development of businesses to customers communication. Club effects in SSA are estimated through a dynamic panel data econometric analysis which follows Arellano and Bond's seminal paper (1991). Good quality of service appears as a pre-requisite to any sustainable increase in access to communication through a pricing allowing cross-subsidization of recipients by senders; otherwise increased access may well lead to lower communication levels as suggested by the dynamic panel econometric results.
Available at: http://works.bepress.com/jose_anson/9/