The Welfare Impact of Competition in Fixed Telephony
AbstractIn Portugal, fixed telephony was liberalized in 2000. In this article, we estimate the impact on prices and consumer welfare of the liberalization process. We use a panel of household level data to estimate a structural model of demand for duration and number of calls of fixed telephony services. We focus on local and national peak period calls. The demand for duration is inelastic. Given these estimates, we perform several simulation exercises. Our results indicate that the per consumer average monthly gain of switching from the basic tariff plan of the incumbent to an alternative tariff plan is of about 70 cents. For some consumers, these gains could be as large as 2 euros.
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Bibliographic InfoPaper provided by Portuguese Competition Authority in its series Working Papers with number 21.
Length: 44 pages
Date of creation: Jun 2006
Date of revision:
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Fixed Telephony; Liberalization; Prices;
Find related papers by JEL classification:
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-12 (All new papers)
- NEP-COM-2007-05-12 (Industrial Competition)
- NEP-MIC-2007-05-12 (Microeconomics)
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