A Survey and Estimating Consumer Surplus in the Mobile Telecommunications in Iran

Abdoli, Ghahraman; Varahrami, Vida

A Survey and Estimating Consumer Surplus in the Mobile Telecommunications in Iran

Document Type : Original Article

Authors

Ghahraman Abdoli ¹

Vida Varahrami ²

¹ Professor and faculty / Tehran University

² Master student of Tehran University

Abstract

Since consumer surplus is relevant to the controversy over establishing an appropriate price level between consumers and service providers, and policy making, the need for a robust measurement of benefit from mobile telephone services (MTS) is increasing. The aim of this paper is to estimate consumer surplus in Iran MTS for the period of 1373-86. The measured net consumer surplus estimated by means of elasticities of appropriate demand reached about US$7 billion in the period of study. In particular, after competition was introduced (by Talia and Irancell into the market) with an accompanying price decrease and increase in the number of subscribers, consumers have benefited greatly. The estimated consumer surplus in this paper does not include network externality (option externality); if this were considered, the total social welfare of the consumer would be larger.

Keywords

Consumer Surplus of Mobile

Demand

Mobile Telephone Services

Access and Services Price

Network Externality

منابع

1- Australian Communications Authority, Australian Communications Authority, Benefits to consumers of telecommunications services in Australia 1996–97 to 2000–2001, prepared by Peter Collins, Marion McCutcheon & Eve Osiowy of the Communications Research Unit, Sydney, Australia, 2001.

2- Bresnahan. T.F, Measuring the spillovers from technical advance: Mainframe computers in financial services, The American Economic Review 76 (1986) (4), pp. 742–755.

3- Brynjolfsson. E, The contribution of information technology to consumer welfare, Information Systems Research 7 (1996) (3), pp. 281–300.

4- Hausman. J. A, Exact consumer's surplus and deadweight loss, The American Economic Review 71 (1981) (4), pp. 662–676.

5- Hausman. J. A , Valuing the effect of regulation on new services in telecommunications. Brookings Papers on Economic Activity, Microeconomics, 1997, (pp. 1–38).

6- Hausman. J. A, Mobile telephone. In: Kumar, Vogelsang and Cave, Editors, Handbook of telecommunications economics, Elsevier Science, Amsterdam (2002), pp. 563–604.

7- Hausman. J.A & Newey. W.K, Nonparametric estimation of exact consumers surplus and deadweight loss, Econometrica 63 (1995) (6), pp. 1445–1476.

8- Hicks. J.R, A revision of demand theory, Oxford University Press, Oxford (1956).

9- Kim. B.W & Park. S.U, Determination of the optimal access charge for the mobile virtual network operator system, ETRI Journal 26 (2004) (6), pp. 665–668.

10- MMC (1998). Cellnet and Vodafone: Reports on references under section 13 of the Telecommunications Act 1984 on the charges made by Cellnet and Vodafone for terminating calls from fixed-line networks, The Director General of Telecommunication, 1998.

11- Oftel, Review of the charge on calls to mobiles, Crown, 2001.

12- Radiocommunications Agency, The economic impact of radio, 2001.

13- Saunders. R.J, Warford. J.J, Wellenius. B, Telecommunications and economic development, The World Bank, Washington, DC (1983).

14- Shy. O, The economics of network industries, Cambridge University Press, Cambridge (2001).

15- Taylor. L.D,.Telecommunications demand in theory and practice, Kluwer Academic Publishers, Dordrecht (1994).

16- Willig. R.D,.Consumer's surplus without apology, American Economic Review 66 (1976) (4), pp. 589–597.

Send comment about this article

Name *

Enter Name.

Email Address *

Enter a valid email address.

Affiliation *