Three-Part Tariffs and Short-Run Rationality in the Local Fixed Telephone Consumption: Empirical Evidence from Medellín
In this paper we are interested in investigating the effects of the threepart tariffs system on consumers’ behavior in the local fixed telephone service provided by the incumbent Telecommunications Company une in Medellín, which was authorized by the Telecommunications Regulatory Commission (crt, for its Spanish name). In order to study consumer behavior and the effect of this tariff system we specify a sort of Engel Curve, which relates expenditure in fixed telephone service and expenditure in public utilities. Endogeneity problems could well arise from this specification, so the empirical strategy for studying households’ consumption is based on a panel data analysis by performing instrumental variables and gmm procedures. Our results supports the hypothesis that consumers surpass expected consumption levels and therefore the total payment for the service is greater than planned, showing a sort of short-run irrationality in consumption.
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- James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
- Jorge Barrientos Marín, 2009.
"On The Consumer Behavior In Urban Colombia: The Case Of Bogotá,"
Ensayos sobre Política Económica,
Banco de la Republica de Colombia, vol. 27(59), pages 83-99, Junio.
- Jorge Barrientos Marín, 2009. "On the Consumer Behavior in Urban Colombia: The Case of Bogotá," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 27(59), pages 83-99, June.
- Mark Armstrong, 2016. "Nonlinear Pricing," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 583-614, October.
- Armstrong, Mark, 2015. "Nonlinear Pricing," MPRA Paper 65779, University Library of Munich, Germany.
- Mark Armstrong, 2015. "Nonlinear Pricing," Economics Series Working Papers 756, University of Oxford, Department of Economics.
- Richard Blundell & Alan Duncan & Krishna Pendakur, 1998. "Semiparametric estimation and consumer demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 435-461. Full references (including those not matched with items on IDEAS)
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