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Behind the scenes of the telecommunications miracle: An empirical analysis of the Indian market

  • Biancini, Sara

The paper analyzes the demand and supply characteristics of the Indian telecommunications market, with the aim of contributing to the debate on the effectiveness of universal access policies in developing countries. The discussion is supported by some empirical evidence derived from a small time-series-cross-section dataset, containing mainly information on the fixed-lines segment of the market. The analysis suggests that the price elasticity of demand for fixed lines might be sensibly higher than the levels usually found in developed countries, while the crucial role of income and other sociodemographic variables seems to be confirmed. The paper also studies the impact of cellular penetration on fixed-lines diffusion. The results suggest the existence of a (positive) network effect in low penetration areas, while substitution (displacement) seems to arise in the most developed ones. Finally, the paper analyzes the supply side of the market, to assess the impact of market competition on investment. Competition seemingly helps stimulating investment in the most developed areas, but does not seem to have a significant impact in the less developed ones.

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Article provided by Elsevier in its journal Telecommunications Policy.

Volume (Year): 35 (2011)
Issue (Month): 3 (April)
Pages: 238-249

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Handle: RePEc:eee:telpol:v:35:y:2011:i:3:p:238-249
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  1. Hausman, Jerry & Tardiff, Timothy & Belinfante, Alexander, 1993. "The Effects of the Breakup of AT&T on Telephone Penetration in the United States," American Economic Review, American Economic Association, vol. 83(2), pages 178-84, May.
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  14. Sridhar, Kala Seetharan & Sridhar, Varadharajan, 2007. "Telecommunications Infrastructure And Economic Growth: Evidence From Developing Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(2), pages 37-56.
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  16. Robert Jensen, 2007. "The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 879-924, 08.
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