Text and voice : complements, substitutes or both?
Working paper
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http://hdl.handle.net/11250/162670Utgivelsesdato
2005Metadata
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- Discussion papers (SAM) [649]
Sammendrag
Text messaging has become an important revenue component for European and Asian mobile
operators. We develop a simple model of demand for mobile services incorporating the
existence of call externalities and network effects. We show that when incoming messages
and calls stimulate outgoing communications, services that are perceived as substitutes, such
as mobile text and voice, may evolve into complements in terms of the price effect when the
network size becomes large. We estimate the demand for text messaging in the Norwegian
market and find tha t the cross-price effect of voice depends on the network size. Voice is a
substitute for text messages for small network sizes, and a complement for large network
sizes.
Utgiver
Norwegian School of Economics and Business Administration. Department of EconomicsSerie
Discussion paper2005:27