Empirical analysis of mobile voice and sms service: Astructural model

Youngsoo Kim, William B. Vogt, Rahul Telang, Ramayya Krishnan

Research output: Contribution to conferencePaper

Abstract

In addition to the wireless telephone boom, similar exponential increasing trend in wireless data service - short messaging services (SMS) -, is visible, as technology advances. Given these interesting communication trends, we develop a structural model to understand mobile users' behavior in the individual level consumption of voice and SMS services, allowing for cross-service dependencies. The key issues are the own-price elasticity and the cross-price elasticities of these services. The cross-price elasticity is of significant importance because the marketing activities are critically influenced by whether the goods are substitutes or complements. The research context also poses interesting econometric challenges (One-way and 'Step' Nonlinear pricing and Discrete (bundle choice)/continuous quantity model). Using a detailed individual level consumption data, we estimate that there is small substitution effect between voice service and SMS services. We also find that own price elasticity for voice services is relatively small. Younger users are far more inelastic than the older group in four kind of elasticity (own- and cross vs. voice and SMS). This is somewhat counter intuitive and gives some unique insight in understanding mobile service.

Original languageEnglish
StatePublished - 2007
Event28th International Conference on Information Systems, ICIS 2007 - Montreal, QC, Canada
Duration: Dec 9 2007Dec 12 2007

Conference

Conference28th International Conference on Information Systems, ICIS 2007
CountryCanada
CityMontreal, QC
Period12/9/0712/12/07

Keywords

  • A Discrete/Continuous Choice Model
  • Mobile Demand Structure
  • Structural Model
  • Wireles Communication

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    Kim, Y., Vogt, W. B., Telang, R., & Krishnan, R. (2007). Empirical analysis of mobile voice and sms service: Astructural model. Paper presented at 28th International Conference on Information Systems, ICIS 2007, Montreal, QC, Canada.