Fixed and mobile broadband; Are they substitutes or complements?

Jinsoo Bae, Yun Jeong Choi and Jong-Hee Hahn
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Jinsoo Bae: Ohio State University
Yun Jeong Choi: Yonsei University

No 2014rwp-68, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: This paper investigates whether fixed and mobile broadband services are substitutes or complements using firm-level panel data obtained from three major telecommunications operators in South Korea. We employ a multi-level demand model based on Hausman et al. (1994), which allow for the possibility of complementarity between differentiated services. The estimated price elasticities of demand indicate that mobile broadband is a (week) substitute for fixed broadband while fixed broadband is complementary to mobile broadband. This is in contrast with the previous studies based on logit models which essentially assume substitution between different technologies. This result implies that fixed and mobile internet services constitute distinctive antitrust markets at least in the early stage of mobile broadband development.

Keywords: Mobile broadband; Fixed broadband; Substitution; Complementarity; Multi-level demand model. (search for similar items in EconPapers)
Pages: 20pages
Date: 2014-07
New Economics Papers: this item is included in nep-com, nep-dcm and nep-ict
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Citations: View citations in EconPapers (3)

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