Competition in Turkish mobile telecommunications markets: Price elasticities and network substitution

  • Authors:

  • Mehmet Karacuka;Justus Haucap;Ulrich Heimeshoff

  • Affiliations:

  • Ege University, Department of Economics, 35100 Bornova, Izmir, Turkey;Heinrich-Heine-University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Universitätsstr. 1, 40225 Düsseldorf, Germany;Heinrich-Heine-University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Universitätsstr. 1, 40225 Düsseldorf, Germany

  • Venue:
  • Telecommunications Policy
  • Year:
  • 2011

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Abstract

This paper estimates demand elasticities for Turkish mobile telecommunications markets. In contrast to most other studies, firm-level data is used to estimate dynamic panel data models including instrumental variable techniques. Both short- and long-run elasticities are calculated, yielding a long-run price elasticity of -0.72 for the post-paid market and of -0.33 for the pre-paid market. The short-run price elasticity is estimated to be -0.36 for the post-paid market and -0.20 for the pre-paid market. In addition, there is evidence of fixed-to-mobile traffic substitution for consumers who use pre-paid cards.