Flow-Through and Competition in the International Message Telephone Service Market
16 Pages Posted: 10 Sep 2004
Date Written: September 2000
One of the most contentious debates in modern telecommunications policy regards whether or not a regulatory mandated reductions in the per-minute costs of long distance carriers - access charges domestically and settlement rates internationally - are fully reflected in the per-minute prices for long distance calls. In this paper, we evaluate the flow through of settlement costs to international long distance prices and find strong evidence that IMTS prices are closely related to settlement costs, and that these prices fully reflect differences in settlement costs. Further, the estimated relationship between prices and settlement cost indicates, under certain assumptions, that the IMTS industry is very competitive.
Keywords: IMTS, Settlement Rates, Interational Telecommunications
JEL Classification: K23, K21, L10, L5, L50, L51, L52, L96
Suggested Citation: Suggested Citation