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Econometric modeling of business Telecommunications demand using Retina and Finite Mixtues

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  • Massimiliano Marinucci

    ()
    (Universidad Complutense de Madrid, Dpto. de Economía Cuantica)

  • Teodosio Pérez-Amaral

    ()
    (Universidad Complutense de Madrid, Dpto. de Economía Cuantica)

Abstract

In this paper we estimate the business telecommunications demands for local, intra-LATA and inter-LATA services, using US data from a Bill Harvesting R survey carried out during 1997. We model heterogeneity, which is present among firms due to a variety of different business telecommunication needs, by estimating normal heteroskedastic mixture regressions. The results show that a three-component mixture model fits the demand for local services well, while a two-component structure is used to model intra-LATA and inter-LATA demand. We characterize the groups in terms of their differences among the coefficients, and then use Retina to perform automatic model selection over an expanded candidate regressor set which includes heterogeneity parameters as well as transformations of the original variables.

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Paper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico in its series Documentos de Trabajo del ICAE with number 0501.

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Length: 39 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:ucm:doicae:0501

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Keywords: Telecommunication Demand Models; Local calls; Inter-LATA calls; intra-LATA calls; Retina; Flexible Functional Forms; Heterogeneity; Finite Mixtures.;

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  1. Teodosio Perez-Amaral & Giampiero M. Gallo & Halbert White, 2003. "A Flexible Tool for Model Building: the Relevant Transformation of the Inputs Network Approach (RETINA)," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(s1), pages 821-838, December.
  2. Jeffrey Rohlfs, 1974. "A Theory of Interdependent Demand for a Communications Service," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 16-37, Spring.
  3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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