Faculty of Economics and Business Administration Publications Database

Is fixed-mobile substitution high enough to deregulate fixed voice telephony? Evidence from the Austrian markets

Briglauer, Wolfgang
Schwarz, Anton
Volume: 1
Number: 39
Pages: 50 - 67
Month: February
ISSN-Print: 0922-680X
Link External Source: Online Version
Year: 2011
Keywords: Fixed-mobile substitution; Fixed networks; Voice telephony; Market definition; Hypothetical monopolist test; De-regulation
Abstract: 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.