|
Price Elasticities for Local Telephone Calls
Rolla Edward Park
Bruce M. Wetzel
Bridger M. Mitchell
Abstract
Price elasticities are estimated for local telephone calls and minutes of conversation using data from a pricing experiment in central Illinois conducted by General Telephone and Electronics. The experiment charges separately for calls and for minutes. Using a model that is consistent with the theory of telephone demand, the authors estimate the effects of both prices. The nonlinear generalized least squares estimates of the elasticities are fairly small--about 0.1 or less in absolute value at experimental price levels--but they are estimated with high precision. The report briefly considers the application of these results to predict the effects of introducing measured service telephone rates in other cities.
|
