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The effect of user interaction on the demand for mobile text messages: Evidence from cross-country data

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  • Basalisco, Bruno

Abstract

This work presents an empirical analysis of the impact of user interaction on the demand for telecommunications. Specifically, we measure mobile telephony demand estimating a point-to-point model of the text messaging traffic exchanged cross-network, identifying the impact of incoming traffic as well as network size. The analysis relies on a monthly dataset spanning 15 countries for the period 2002–2007. The econometric estimates of price elasticities indicate that incoming traffic is a key driver of SMS demand, as previously established for fixed telephony. A further novel contribution is the estimation of the demand impact of network size, a confounding factor for the effect of incoming traffic. The results hold implications for theories of network competition, optimal pricing by telecommunications operators and regulation.

Suggested Citation

  • Basalisco, Bruno, 2012. "The effect of user interaction on the demand for mobile text messages: Evidence from cross-country data," Information Economics and Policy, Elsevier, vol. 24(2), pages 132-144.
    • Handle: RePEc:eee:iepoli:v:24:y:2012:i:2:p:132-144
    DOI: 10.1016/j.infoecopol.2011.10.001
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    Cited by:

    1. Wellmann, Nicolas, 2017. "OTT-Messaging and Mobile Telecommunication: A Joint Market? An Empirical Approach," 28th European Regional ITS Conference, Passau 2017 169503, International Telecommunications Society (ITS).
    2. Wellmann, Nicolas, 2017. "OTT-messaging and mobile telecommunication: A joint market? - An empirical approach," DICE Discussion Papers 256, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Wellmann, Nicolas, 2019. "Are OTT messaging and mobile telecommunication an interrelated market? An empirical analysis," Telecommunications Policy, Elsevier, vol. 43(9).

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    More about this item

    Keywords

    Mobile SMS; Price elasticity; Network effect; Point-to-point demand; Incoming traffic; Information exchange;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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