An Analysis Of Equilibrium Relationship Between Price Elasticity And Expenditure Level: A Case Study Of Korean Mobile Market Data
AbstractIn most developing countries, telecommunications industry has been grown fast and still has more growth potential than in the developed countries. Clearly the telecommunications industry contributes to foster economic developments and also to narrow the communication gaps among countries. Among many components relating to the success of quick developments of telecommunication services, an appropriate and optimal pricing strategies is the most vital element. In this view point, this paper examines the optimal price discrimination strategy for firms in a monopolistically competitive market. The primary interest is the theoretical relationship between price elasticity and the average expenditure level of consumers. Our equilibrium analysis shows that the relationship can go either way (positive or negative) depending on the prevailing price level of the product in concern. As an empirical example, using a hierarchical Bayes model we find that heavy user of mobile service are substantially more elastic to the price of calls in Korea. A discussion of the optimal pricing scheme and market structure is in order.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.
Volume (Year): 34 (2009)
Issue (Month): 2 (December)
Price Discrimination; Price Elasticity; Price Sensitivity; Mobile Telecommunications; Hierarchical Bayes Model;
Find related papers by JEL classification:
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Changhui Kang).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.