Determinants of demand for residential access and long-distance telephone services in Korea.

Abstract

In this dissertation we develop an econometric model of telephone service demand in order to compare the demand characteristics of consumers in Korea and North America and to analyze the effects of policy changes in the telephone service field. To do this, several factors that influence the behavior of call demand are analyzed. We limit ourselves to two different types of call demand: residential access demand and long distance (toll) call demand. For the residential access demand, limited dependent variable techniques are used. Results suggest that the price elasticity for residential access demand in Korea is smaller than those indicated in similar North American studies. The finding is also smaller than that which is found for Korea. The income elasticity of demand for residential access telephone service is found to be much smaller than the estimates obtained by previous researchers in Korea. For toll call demand, pooled cross-sectional/times-series econometric methods were used to estimate the average price and income elasticities of toll call users. The price elasticities for long distance call demand are slightly larger than their counterparts in Canada and the income elasticities are somewhat smaller than those in the US and Canada. It is difficult to compare results with previous Korean studies, since they do not control for the rate level.