An Empirical Analysis of Cellular Demand in South Africa
We analyze demand for prepaid cellular voice and short message service (SMS) in South Africa by means of a demand-and-supply structural model based on a multinomial specification fitted to a cross-sectional data set on Vodacom customers collected in 2005. We find that consumers are very sensitive to changes in prices, with higher price elasticities than those typically found in developed countries. Consumers attach a higher value to communications during peak hours but since these are priced highly, they are as much as twice more elastic than off-peak communications. In relative terms, demand for communications during peak hours is more elastic for urban than for rural consumers, while the reverse can be said about demand for off-peak hours. The highest valuations are those placed by rural consumers on working hour communications. A policy implication of our analysis is that while in terms of access cellular deployment in South Africa has gone a long way into bridging the gap between the ``first'' and ``second'' economies, in terms of usage if market organizations or regulatory institutions were to encourage further investment in network availability in rural areas this could be rewarding both for the firm and its rural customers.
(This abstract was borrowed from another version of this item.)
|Date of creation:||Sep 2009|
|Date of revision:|
|Contact details of provider:|| Phone: (+33) 5 61 12 86 23|
Web page: http://www.tse-fr.eu/
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.:
- Ivaldi, Marc & Verboven, Frank, 2005.
"Quantifying the effects from horizontal mergers in European competition policy,"
International Journal of Industrial Organization,
Elsevier, vol. 23(9-10), pages 669-691, December.
- Ivaldi, Marc & Verboven, Frank, 2001. "Quantifying the Effects from Horizontal Mergers in European Competition Policy," CEPR Discussion Papers 2697, C.E.P.R. Discussion Papers.
- Wolak, Frank A., 1996. "Can universal service survive in a competitive telecommunications environment? Evidence from the United States consumer expenditure survey," Information Economics and Policy, Elsevier, vol. 8(3), pages 163-203, September.
- Sridhar, Kala Seetharam & Sridhar, Varadharajan, 2004. "Telecommunications infrastructure and economic growth: Evidence from developing countries," Working Papers 04/14, National Institute of Public Finance and Policy.
- Ralf Dewenter & Justus Haucap, 2007. "Demand Elasticities for Mobile Telecommunications in Austria," Ruhr Economic Papers 0017, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Dewenter, Ralf & Haucap, Justus, 2004. "Estimating Demand Elasticities for Mobile Telecommunications in Austria," Working Paper 33/2004, Helmut Schmidt University, Hamburg.
- McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457 Elsevier.
- Foreman, R Dean & Beauvais, Edward, 1999. "Scale Economies in Cellular Telephony: Size Matters," Journal of Regulatory Economics, Springer, vol. 16(3), pages 297-306, November.
- Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
- Ralf Dewenter & Justus Haucap, 2008.
"Demand Elasticities for Mobile Telecommunications in Austria,"
Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik),
Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 228(1), pages 49-63, February.
- Dewenter, Ralf & Haucap, Justus, 2007. "Demand Elasticities for Mobile Telecommunications in Austria," Ruhr Economic Papers 17, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
- Torero, Maximo & Chowdhury, Shyamal K. & Galdo, Virgilio, 2003. "Willingness to pay for the rural telephone service in Bangladesh and Peru," Information Economics and Policy, Elsevier, vol. 15(3), pages 327-361, September.
- McKenzie, David J & Small, John P, 1997. "Econometric Cost Structure Estimates for Cellular Telephony in the United States," Journal of Regulatory Economics, Springer, vol. 12(2), pages 147-57, September.
- Castro Martins, Maria Lurdes, 2003. "International differences in telecommunications demand," Information Economics and Policy, Elsevier, vol. 15(3), pages 291-303, September.
- 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.
- Kenneth E. Train & Daniel L. McFadden & Moshe Ben-Akiva, 1987. "The Demand for Local Telephone Service: A Fully Discrete Model of Residential Calling Patterns and Service Choices," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 109-123, Spring.
When requesting a correction, please mention this item's handle: RePEc:tse:wpaper:22271. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.