International differences in telecommunications demand

Abstract

Countries with significantly different development levels experience similar regulatory transformations in the telecommunications industry. While these changes may be particularly successful in lowering costs, they may also lead to lower consumer welfare in markets in which consumers are highly sensitive to price changes. This paper assessed whether price elasticities for telecommunications demand differ between broad groups of countries according to their development levels. We provided empirical evidence of differences in estimated demand elasticities between developed and less developed countries. Our results suggest that consumers in poorer countries may experience greater welfare losses when incentive regulations are implemented.