Econometric modelling of Spanish very long distance international calling

Abstract

We estimate a model of the demand for outgoing telephone calls from Spain to a group of African and Oriental countries. The traffic to those countries is called very long distance calling because of the high tariffs applicable to all of them even when some of them are geographically not very distant. In this study a theoretical framework is used which takes into account the specific characteristics of the international long distance services and the socio-economic relationships between Spain and this group of countries. The analysis of annual data for minutes of calling between Spain and 27 countries from 1982 to 1991, using panel data techniques, reveals a significant own-price elasticity of −1.31 and a positive reciprocal calling effect of +0.69. The estimated elasticity of the outgoing traffic to the volume of foreign tourism is +0.22. The estimated elasticities are in the range that is reported in other empirical studies. The favorite equation passes a battery of diagnostics.