Estimating Demand Elasticities for Mobile Telecommunications in Austria

Abstract

Abstract : This paper analyzes price elasticities in the Austrian market for mobile telecommunications services using data on firm-specific data on different tariffs. Both static and dynamic panel data analyses were used to estimate short- and long-run price elasticities and the impact of networks' subscriber bases on the demand for mobile calls. The results indicate that the demand for mobile telecommunications services in Austria is relatively elastic when compared to other countries. From a competition policy perspective, these results imply that policy makers in Austria have to be less concerned about collusion between mobile operators than in other countries. This result is consistent with more qualitative comparative studies that have demonstrated the high degree of competition in the Austrian mobile telecommunications sector. Given the regulatory framework that is in place in Austria (e.g., involving the regulation of termination fees and mobile number portability), the authors do not see any obvious reason for any further regulatory intervention or supervision at this point. The intense competition between mobile operators not only makes collusion relatively unlikely, but it also benefits consumers.