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An Empirical Analysis of the Demand for Fixed and Mobile Telecommunications Services

By  |  February 18, 2013

Posted by D. Daniel Sokol

Yongkyu Kim, Hanyang University – Department of Economics, Jin-Soo Yoo, Sookmyung Women’s University – Department of Economics, Seonghoon Jeon, Sogang University – Department of Economics, and Yoon-Jae Whang, Seoul National University – School of Economics offer An Empirical Analysis of the Demand for Fixed and Mobile Telecommunications Services

ABSTRACT: In this paper, we estimate the own- and cross-price elasticities and income elasticity of various fixed and mobile telephone services using monthly time series data. We estimate expenditure share of various telecommunications services such as local, toll, LM (Land to Mobile), Mobile Voice and Short Message Services. We employ AIDS (Almost Ideal Demand System) as the estimation model and employ Triangular Error Correction Model in the estimation to consider the cointegrated relationship between variables. We show that the own-price elasticity of the demand for local call is -1.06 and the own-price elasticity of the demand for mobile is -0.85. This result is consistent with those of previous studies.