Demand elasticities for international message telephone service
Using a point-to-point model of toll demand, this paper provides estimates of own-price demand elasticities for international message telephone service. The study improves on previous studies by using more recent data and endogenizing price. Consistent with earlier studies, the demand for IMTS is found to be price inelastic, about −0.28 on average, in the short-run and near unitary elastic, −1.04 on average, in the long run. Both the level and the elasticity of demand are found to be positively related to the size of the telephone network. The own-price elasticity of demand for a select group of countries is provided.
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