Estimating Demand for Cellular Phone Service under Nonlinear Pricing
Cellular phone carriers typically offer complicated nonlinear tariffs. Consumers make a discrete choice among several rate plans. Each plan has a nonlinear price schedule, and price is usually lower for in-network calls. I present an empirical framework to estimate demand under such nonlinear pricing schemes by using parsimonious data and apply the estimation method to analyze the cellular phone service market in Taiwan. Based on the estimated model, I evaluate the impacts of termination-based pricing schemes on the market structure. While the existence of in-network discounts causes considerable tipping effects on market shares, the effects come primarily from reducing the average prices, not from the difference between in-network and off-network prices. There is no evidence showing that termination-based pricing by itself has significant effects on market structure.
|Date of creation:||Oct 2007|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicholas Economides & Katja Seim & V. Brian Viard, 2008.
"Quantifying the benefits of entry into local phone service,"
RAND Journal of Economics,
RAND Corporation, vol. 39(3), pages 699-730.
- Nicholas Economides & V. Brian Viard & Katja Seim, 2005. "Quantifying the Benefits of Entry into Local Phone Service," Working Papers 05-08, NET Institute, revised Nov 2005.
- Nicholas Economides & Katja Seim & V. Brian Viard, 2007. "Quantifying the Benefits of Entry into Local Phone Service," Working Papers 07-27, New York University, Leonard N. Stern School of Business, Department of Economics.
- Nicholas Economides & V. Brian Viard & Katja Seim, 2007. "Quantifying the Benefits of Entry into Local Phone Service," Working Papers 07-38, NET Institute, revised Oct 2007.
- Nicholas Economides & V. Brian Viard & Katja Seim, 2007. "Quantifying the Benefits of Entry into Local Phone Service," Working Papers 07-48, NET Institute, revised Dec 2007.
- Nicholas Economides & Katja Seim & V. Brian Viard, 2005. "Quantifying the Benefits of Entry into Local Phone Service," Working Papers 05-17, New York University, Leonard N. Stern School of Business, Department of Economics.
- Michal Grajek, 2003. "Estimating Network Effects and Compatibility in Mobile Telecommunications," CIG Working Papers SP II 2003-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Michal Grajek, 2007. "Estimating network effects and compatibility in mobile telecommunications," ESMT Research Working Papers ESMT-07-001, ESMT European School of Management and Technology.
- Kim, Hee-Su & Kwon, Namhoon, 2003. "The advantage of network size in acquiring new subscribers: a conditional logit analysis of the Korean mobile telephony market," Information Economics and Policy, Elsevier, vol. 15(1), pages 17-33, March.
- Harikesh Nair & Jean-Pierre Dubé & Pradeep Chintagunta, 2005. "Accounting for Primary and Secondary Demand Effects with Aggregate Data," Marketing Science, INFORMS, vol. 24(3), pages 444-460, November.
- Nair, Harikesh S. & Dube, Jean-Pierre & Chintagunta, Pradeep, 2004. "Accounting for Primary and Secondary Demand Effects with Aggregate Data," Research Papers 1949, Stanford University, Graduate School of Business.
- Eugenio J. Miravete, 2002. "Estimating Demand for Local Telephone Service with Asymmetric Information and Optional Calling Plans," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 943-971.
- Miravete, Eugenio J, 2000. "Estimating Demand for Local Telephone Service with Asymmetric Information and Optional Calling Plans," CEPR Discussion Papers 2635, C.E.P.R. Discussion Papers.
- Anja Lambrecht & Katja Seim & Bernd Skiera, 2007. "Does Uncertainty Matter? Consumer Behavior Under Three-Part Tariffs," Marketing Science, INFORMS, vol. 26(5), pages 698-710, 09-10.
- Jerry A. Hausman, 1997. "Valuing the Effect of Regulation on New Services in Telecommunications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1997 Micr), pages 1-54.
- Philip M. Parker & Lars-Hendrik Roller, 1997. "Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the Mobile Telephone Industry," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 304-322, Summer.
- Sridhar Narayanan & Pradeep Chintagunta & Eugenio Miravete, 2007. "The role of self selection, usage uncertainty and learning in the demand for local telephone service," Quantitative Marketing and Economics (QME), Springer, vol. 5(1), pages 1-34, March.
- Gans, Joshua S. & King, Stephen P., 2001. "Using 'bill and keep' interconnect arrangements to soften network competition," Economics Letters, Elsevier, vol. 71(3), pages 413-420, June.
- Gans, J.S. & King, S.P., 2000. "Using 'Bill and Keep' Interconnect Arrangements to Soften Network Competiti on," Department of Economics - Working Papers Series 739, The University of Melbourne.
- Phillip Leslie, 2004. "Price Discrimination in Broadway Theater," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 520-541, Autumn.
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July. Full references (including those not matched with items on IDEAS)