Is fixed-mobile substitution strong enough to de-regulate fixed voice telephony? Evidence from the Austrian markets

In this paper, we estimate own-price elasticities for fixed network voice telephony access and national calls services for private users as well as cross-price elasticities to mobile services using time series data from 2002 to 2007 from the Austrian markets. Using instrumental variable estimates an...

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Bibliographic Details
Published in:	Journal of regulatory economics 2011-02, Vol.39 (1), p.50-67
Main Authors:	Briglauer, Wolfgang, Schwarz, Anton, Zulehner, Christine
Format:	Article
Language:	eng
Subjects:	(De-)regulation Alliances Analysis Austria Cointegration Communications networks Competition Competitiveness Deregulation Economic theory Economics Economics and Finance Estimation Fixed networks Fixed-mobile substitution Hypotheses Hypothetical monopolist test Industrial Organization Market analysis Market definition Market segments Microeconomics Original Article Price elasticity Public Finance Regulation Regulatory policy Retail trade Studies Telecommunications industry Time series Transition economies Voice telephony Wireless carriers
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Summary:	In this paper, we estimate own-price elasticities for fixed network voice telephony access and national calls services for private users as well as cross-price elasticities to mobile services using time series data from 2002 to 2007 from the Austrian markets. Using instrumental variable estimates and considering cointegration, we find that access is inelastic while calls are elastic. We conclude that the retail market for national calls of private users can probably be deregulated due to sufficient competitive pressure from mobile. Access-substitution on the other hand does not seem to be strong enough to justify de-regulation.
ISSN:	0922-680X 1573-0468