Substitution between Mobile and Fixed Telephones in Korea

Substitution between Mobile and Fixed Telephones in Korea The stock of mobile telephones has surpassed fixed phones in Korea. Presently, the density is more than 60 of every 100 inhabitants. Thus, the potential for mobile telephones to become a substitute for, and directly compete with fixed telephones, has become evident. The aim of this paper is to examine the impact of rapid growth in mobile telephones on the access demand for traditional fixed telephones. The study shows that a 1% increase in the number of mobile telephones results in a reduction of 0.10–0.18% in new fixed connections and a 0.14–0.22% increase in fixed disconnections. The empirical analysis is carried out with Korean regional panel data for the period 1991–1998. The study is relevant to several important public policy issues. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Substitution between Mobile and Fixed Telephones in Korea

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2002 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1015649128024
Publisher site
See Article on Publisher Site

Abstract

The stock of mobile telephones has surpassed fixed phones in Korea. Presently, the density is more than 60 of every 100 inhabitants. Thus, the potential for mobile telephones to become a substitute for, and directly compete with fixed telephones, has become evident. The aim of this paper is to examine the impact of rapid growth in mobile telephones on the access demand for traditional fixed telephones. The study shows that a 1% increase in the number of mobile telephones results in a reduction of 0.10–0.18% in new fixed connections and a 0.14–0.22% increase in fixed disconnections. The empirical analysis is carried out with Korean regional panel data for the period 1991–1998. The study is relevant to several important public policy issues.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 13, 2004

References

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