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The Consumer Loss of the Minimum Duration for Mobile Telephone Calls

Lukasz Grzybowski and Pedro Pereira

No 26, Working Papers from Portuguese Competition Authority

Abstract: We estimate, for Portugal, the monetary loss per consumer of the existence of a minimum duration for mobile telephone calls. First, we estimate the demand for durations of calls, using individual level data and a Tobit model for panel data with individual random effects. The demand for duration is inelastic, and the elasticity varies across firms. At current prices, the average uncensored duration of calls ranges between 63-66 seconds, while with a minimum duration, the average duration is 101-109 seconds. The existence of a minimum duration for calls leads to a monetary loss for consumers of 35-40% of the average bill.

Keywords: Mobile Telephony; Price Elasticities; Call Duration; Tobit model (search for similar items in EconPapers)
JEL-codes: L13 L43 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2007-07
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