Fixed-Mobile Call Substitution: Evidence from Korean Long-Distance Markets
27 Pages Posted: 6 Nov 2003
Date Written: 2003
Abstract
As mobile telephone services experienced revolutionary growth in most countries throughout the world, they began to compete with fixed telephone services, first for use and then for access. This paper attempts to provide empirical evidence on fixed-mobile substitution by applying an econometric model of fixed telephone toll demand to Korean regional panel data. The time span encompassed by the study, 1993-1997, corresponds to the early development stage of mobile services in Korea. The study clearly shows that mobile calls were substitutes for toll calls even in these early years. My demand model is distinct from existing ones in that it does not consider only network and call externalities but also incorporates an implicit price for face-to-face interactions. Also, the study is relevant to some important public policy issues.
JEL Classification: D12, L96
Suggested Citation: Suggested Citation
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