Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Wednesday, February 23, 2011

Competition in the Turkish mobile telecommunications market: Price elasticities and network substitution

Posted by D. Daniel Sokol

Justus Haucap (Heinrich-Heine-University of Düsseldorf, Düsseldorf Institute for Competition Economics), Ulrich Heimeshoff (Heinrich-Heine-University of Düsseldorf, Düsseldorf Institute for Competition Economics), and Mehmet Karacuka (Ege University, Department of Economics) have written on Competition in the Turkish mobile telecommunications market: Price elasticities and network substitution.

ABSTRACT: This paper estimates demand elasticities for the Turkish mobile telecommunication market. In contrast to most other studies, firm level data is used to estimate dynamic panel data models including instrumental variable techniques. Both short- and long-run elasticities are calculated, yielding a long-run price elasticity of -0.72 for the post-paid market and of -0.33 for the pre-paid market. The short-run price elasticity is estimated to be -0.36 for the post-paid market and -0.20 for the pre-paid market. In addition, evidence of fixed to mobile traffic substitution is provided for consumers that use pre-paid cards.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/02/competition-in-the-turkish-mobile-telecommunications-market-price-elasticities-and-network-substitut.html

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