Demand in a Portfolio-Choice Environment: The Evolution of Telecommunications

36 Pages Posted: 22 Aug 2012 Last revised: 1 Nov 2012

See all articles by Jeffrey Macher

Jeffrey Macher

Georgetown University - Center for Business and Public Policy

John W. Mayo

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy

Olga Ukhaneva

Georgetown University - Center for Business and Public Policy

Glenn Woroch

University of California, Berkeley; Compass Lexecon; Georgetown Center for Business & Public Policy

Date Written: August 20, 2012

Abstract

We explore the pattern and evolution of the rapidly changing landscape of consumers' wired and wireless telecommunications choices with a model that extends the traditional (node-to-node) demand structure. We then empirically estimate a consumer choice model using household-level observations from 2003-2010. Households that are more affiliated with their domicile are more prone toward wireline services while more "on the go" households are more attracted to wireless telephony. The estimations indicate that subscription to wireline and wireless telephony are substitutes rather than complements. Finally, the quality convergence in wireless and wireline services has contributed significantly to shifts in consumers' telephone portfolios.

Keywords: telecommunications demand, fixed-mobile substitution

JEL Classification: D12, L96

Suggested Citation

Macher, Jeffrey and Mayo, John W. and Ukhaneva, Olga and Woroch, Glenn, Demand in a Portfolio-Choice Environment: The Evolution of Telecommunications (August 20, 2012). Georgetown McDonough School of Business Research Paper No. 2012-19. Available at SSRN: https://ssrn.com/abstract=2133424 or http://dx.doi.org/10.2139/ssrn.2133424

Jeffrey Macher

Georgetown University - Center for Business and Public Policy ( email )

Washington, DC 20057
United States
202-687-4793 (Phone)
202-687-1366 (Fax)

HOME PAGE: http://explore.georgetown.edu/people/jtm4/?PageTemplateID=319

John W. Mayo

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy ( email )

3700 O Street, NW
Washington, DC 20057
United States
(202) 687-6972 (Phone)
(202) 687-7310 (Fax)

Olga Ukhaneva

Georgetown University - Center for Business and Public Policy ( email )

Washington, DC 20057
United States

Glenn Woroch (Contact Author)

University of California, Berkeley ( email )

Department of Economics
549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-4308 (Phone)
510-642-6615 (Fax)

HOME PAGE: http://elsa.berkeley.edu/~woroch/

Compass Lexecon ( email )

1111 Broadway
Oakland, CA 94607
United States
510-285-1266 (Phone)
510-285-1245 (Fax)

HOME PAGE: http://www.compasslexecon.com/professionals/bio?id=141

Georgetown Center for Business & Public Policy ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-3686 (Phone)

HOME PAGE: http://cbpp.georgetown.edu/

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