Demand price elasticity of mobile voice communication: A comparative firm level data analysis

Fayçal Sawadogo ()
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Fayçal Sawadogo: CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne, FERDI - Fondation pour les Etudes et Recherches sur le Développement International

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Abstract: This study estimates the price elasticity of mobile voice communication in developed and developing countries using quarterly operator data from 2000 to 2017. Using a dynamic panel model through system-GMM, the study finds that the demand price elasticity is higher for operators in developed countries. Controlling for cross-price elasticity with internet data prices reveals that voice communication is a substitute for internet data usage in developed countries. Another important finding is that, for operators in developing countries, the price elasticity decreases with market development level, whereas it increases for those in developed countries. Demand for mobile voice communication is thus more sensitive to price changes in the less penetrated markets in developing countries and the mature markets in developed countries. Furthermore, over time, price elasticity has decreased across operators in developing countries, highlighting the need for updating regulatory frameworks for the telecommunications sector to reflect the sector's various developments. In addition, when formulating regulatory policies, some important economic factors, such as income level and domestic market characteristics, should be considered to avoid losses in consumer welfare. The high estimated price elasticities suggest that operators do not have an obvious interest in engaging in collusive behavior that would hinder competition. Moreover, since there is no differential effect due to operators' positions or market shares, asymmetric regulation of the dominant operators should be avoided.

Keywords: Comparative analysis; Telecommunications services; Econometric demand model; Dynamic panel analysis (search for similar items in EconPapers)
Date: 2021-07-05
New Economics Papers: this item is included in nep-com, nep-isf, nep-pay and nep-reg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03293392v1
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Citations: View citations in EconPapers (3)

Published in Information Economics and Policy, 2021, ⟨10.1016/j.infoecopol.2021.100939⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03293392

DOI: 10.1016/j.infoecopol.2021.100939

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