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Market Structure, Competition, and Pricing in United States International Telephone Service Markets

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  • Gary Madden
  • Scott J. Savage

Abstract

Several national governments argue international telephone prices are high because of asymmetric competition and inefficiencies in the accounting arrangements that govern the telecommunications services trade. This paper develops a model of U.S. international telephone pricing that allows for the accounting rate system and contains market-structure variables for both the U.S. and foreign ends of bilateral markets. Model estimation is on 39 bilateral telephone markets from 1991 through 1994. Parameter estimates reveal that settlement rates, market concentration, competition at either end of the bilateral market, and ownership are significant determinants of prices. These findings support initiatives promoting accounting-rate reductions and increased competition. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Gary Madden & Scott J. Savage, 2000. "Market Structure, Competition, and Pricing in United States International Telephone Service Markets," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 291-296, May.
    • Handle: RePEc:tpr:restat:v:82:y:2000:i:2:p:291-296
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    Cited by:

    1. repec:kap:iaecre:v:12:y:2006:i:1:p:131-137 is not listed on IDEAS
    2. Mayo, John W. & Ukhaneva, Olga, 2017. "International telecommunications demand," Information Economics and Policy, Elsevier, vol. 39(C), pages 26-35.
    3. Agiakloglou, Christos & Gkouvakis, Michail, 2015. "Causal interrelations among market fundamentals: Evidence from the European Telecommunications sector," The Quarterly Review of Economics and Finance, Elsevier, vol. 55(C), pages 150-159.
    4. Lee, Suil, 2020. "Measuring the Effects of the Uniform Settlement Rate Requirement in the International Telephone Industry," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 42(1), pages 57-96.
    5. Einhorn, Michael A., 2002. "International telephony: a review of the literature," Information Economics and Policy, Elsevier, vol. 14(1), pages 51-73, March.
    6. Christos Agiakloglou & Michael Polemis, 2018. "Evaluating the liberalization process on Telecommunications services for EU countries," Economics and Business Letters, Oviedo University Press, vol. 7(3), pages 98-107.
    7. Alberto Nucciarelli & Massimo Gastaldi & Nathan Levialdi, 2010. "Asymmetric competition and collection rates differentials: determinants of prices in international telephone service markets," Netnomics, Springer, vol. 11(3), pages 315-329, October.
    8. Agiakloglou, Christos & Karkalakos, Sotiris, 2006. "Estimating Diffusion Rates for Telecommunications: Evidence from European Union," MPRA Paper 45788, University Library of Munich, Germany.
    9. Wallsten, Scott J., 2000. "Telecom traffic and investment in developing countries : the effects of international settlement rate reductions," Policy Research Working Paper Series 2401, The World Bank.
    10. Rajeev Goel, 2009. "Technological complementarities, demand, and market power," Netnomics, Springer, vol. 10(2), pages 161-170, October.
    11. Gary Madden & Scott J. Savage & Jason Ng, 2003. "Asia–Pacific Telecommunications Liberalisation and Productivity Performance," Australian Economic Papers, Wiley Blackwell, vol. 42(1), pages 91-102, March.
    12. Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2005. "Assessing the impact of communication costs on international trade," Journal of International Economics, Elsevier, vol. 67(2), pages 428-445, December.
    13. Heng Ju & Guofu Tan, 2016. "Bilateral Market Structures And Regulatory Policies In International Telephone Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(2), pages 393-424, May.
    14. Jason Pearcy & Scott J. Savage, 2009. "The Effects of International Simple Resale on Prices in International Telecommunications Markets," Working Papers 09-19, NET Institute, revised Sep 2009.
    15. James Alleman & Gary Madden & Scott Savage, 2003. "Dominant carrier market power in US international telephone markets," Applied Economics, Taylor & Francis Journals, vol. 35(6), pages 665-673.
    16. Madden, Gary & Savage, Scott J. & Coble-Neal, Grant, 2002. "Forecasting United States-Asia international message telephone service," International Journal of Forecasting, Elsevier, vol. 18(4), pages 523-543.
    17. Christos Agiakloglou & Demetrius Yannelis, 2006. "Estimation of Price Elasticities for International Telecommunications Demand," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(1), pages 131-137, February.
    18. Faris Alshubiri, 2020. "Analysis of the Financial Model of the ICT Price Basket on Financial Development Indicators of GCC Countries," The Review of Socionetwork Strategies, Springer, vol. 14(1), pages 147-170, April.
    19. James Alleman & Gary Madden & Scott Savage, 2000. "Trade imbalance in international message telephone services," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1311-1321.

    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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