On the Distance Dependence of the Price Elasticity of Telecommunications Demand; Meta-analysis, and Alternative Theoretical Backgrounds

Hans Ouwersloot, Piet Rietveld

Research output: Working paperProfessional

Abstract

The positive correlation between the absolute price elasticity of telecommunications demand and the distance of the calling relation is well known. In this paper we first present a meta-analysis of existing studies to buttress the distance dependence empirically. The analysis confirms the existence of distance dependence, and gives insight into the size of the effect.Next we look for various explanations of the distance dependence. We analyse the roles of the functional form of demand functions in conjunction with the dependence of price on distance, and consider whether spatial interaction theory can provide an explanation. One of the interesting findings is that the price effect may explain the distance dependence, but that this explanation is not unequivocal. On the other hand we show that incorporating spatial interaction theory elements in a quite basic utility maximization model of information demand also leads to distance dependent telecommunications demand (keeping prices of calling fixed).
Original languageEnglish
Place of PublicationAmsterdam
PublisherTinbergen Instituut
Publication statusPublished - 1997

Publication series

NameDiscussion paper TI
No.97-080/3

Fingerprint

Meta-analysis
Telecommunications demand
Price elasticity
Spatial interaction
Price effects
Utility maximization
Functional form
Demand function

Cite this

Ouwersloot, H., & Rietveld, P. (1997). On the Distance Dependence of the Price Elasticity of Telecommunications Demand; Meta-analysis, and Alternative Theoretical Backgrounds. (Discussion paper TI; No. 97-080/3). Amsterdam: Tinbergen Instituut.
Ouwersloot, Hans ; Rietveld, Piet. / On the Distance Dependence of the Price Elasticity of Telecommunications Demand; Meta-analysis, and Alternative Theoretical Backgrounds. Amsterdam : Tinbergen Instituut, 1997. (Discussion paper TI; 97-080/3).
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Ouwersloot, H & Rietveld, P 1997 'On the Distance Dependence of the Price Elasticity of Telecommunications Demand; Meta-analysis, and Alternative Theoretical Backgrounds' Discussion paper TI, no. 97-080/3, Tinbergen Instituut, Amsterdam.

On the Distance Dependence of the Price Elasticity of Telecommunications Demand; Meta-analysis, and Alternative Theoretical Backgrounds. / Ouwersloot, Hans; Rietveld, Piet.

Amsterdam : Tinbergen Instituut, 1997. (Discussion paper TI; No. 97-080/3).

Research output: Working paperProfessional

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Ouwersloot H, Rietveld P. On the Distance Dependence of the Price Elasticity of Telecommunications Demand; Meta-analysis, and Alternative Theoretical Backgrounds. Amsterdam: Tinbergen Instituut. 1997. (Discussion paper TI; 97-080/3).