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The Consumer Loss of the Minimum Duration for Mobile Telephone Calls

Author

Listed:
  • Lukasz Grzybowski

    () (University of Alicante)

  • Pedro Pereira

    () (Autoridade da ConcorrĂȘncia)

Abstract

We estimate, for Portugal, the monetary loss per consumer of the existence of a minimum duration for mobile telephone calls. First, we estimate the demand for durations of calls, using individual level data and a Tobit model for panel data with individual random effects. The demand for duration is inelastic, and the elasticity varies across firms. At current prices, the average uncensored duration of calls ranges between 63-66 seconds, while with a minimum duration, the average duration is 101-109 seconds. The existence of a minimum duration for calls leads to a monetary loss for consumers of 35-40% of the average bill.

Suggested Citation

  • Lukasz Grzybowski & Pedro Pereira, 2007. "The Consumer Loss of the Minimum Duration for Mobile Telephone Calls," Working Papers 26, Portuguese Competition Authority.
  • Handle: RePEc:pca:wpaper:26
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    File URL: http://www.concorrencia.pt/download/WP26_Duration.pdf
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    Keywords

    Mobile Telephony; Price Elasticities; Call Duration; Tobit model;

    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
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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