Demand in a Portfolio-Choice Environment: The Evolution of Telecommunications
36 Pages Posted: 22 Aug 2012 Last revised: 1 Nov 2012
Date Written: August 20, 2012
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: Suggested Citation