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Estimating scale economies of the wireless telecommunications industry using EVA data

Author

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  • Nam, Changi
  • Kwon, Youngsun
  • Kim, Seongcheol
  • Lee, Hyeongjik

Abstract

This paper proposes a new estimation method of total cost and average cost curves and applies it to the telecommunications industry. The method is more flexible and entails less hassle for data collection than traditional methods. The results show that the long-run average cost (LRAC) curve is downward sloping, revealing the presence of economies of scale in production. The two largest Korean mobile network operators are realizing full economies of scale, while the smallest operator is not. Finally, the paper recommends three policy alternatives that the Ministry of Information and Communication of Korea can draw on to increase efficiency in the Korean mobile telecommunications market.

Suggested Citation

  • Nam, Changi & Kwon, Youngsun & Kim, Seongcheol & Lee, Hyeongjik, 0. "Estimating scale economies of the wireless telecommunications industry using EVA data," Telecommunications Policy, Elsevier, vol. 33(1-2), pages 29-40, February.
    • Handle: RePEc:eee:telpol:v:33:y::i:1-2:p:29-40
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    Citations

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    Cited by:

    1. Kwon, Youngsun & Park, Duk Kyu & Rhee, Hongjai, 2017. "Spectrum fragmentation: Causes, measures and applications," Telecommunications Policy, Elsevier, vol. 41(5), pages 447-459.
    2. Kibae Kim & Songhee Kang & Jorn Altmann, 2014. "Cloud Goliath Versus a Federation of Cloud Davids: Survey of Economic Theories on Cloud Federation," TEMEP Discussion Papers 2014117, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jul 2014.
    3. Kwon, Youngsun & Kwon, Joungwon, 2017. "An overview of Telecommunications Policy's 40-year research history: Text and bibliographic analyses," Telecommunications Policy, Elsevier, vol. 41(10), pages 878-890.
    4. Russell Pittman, 2012. "The Proposed Merger of AT&T and T-Mobile: Are There Unexhausted Scale Economies in U.S. Mobile Telephony?," EAG Discussions Papers 201202, Department of Justice, Antitrust Division.
    5. Viktória KOCSIS & Paul de BIJL & Rob van der NOLL & Bert TIEBEN, 2015. "Reconsidering ex ante Regulation in the Dutch Electronic Communications Market," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(98), pages 61-83, 2nd quart.
    6. Mohd Fazli Mohd Sam & Yasuo Hoshino, 2013. "Performance of ICT Industry in Six Asian Countries," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 4(6), pages 96-119, November.
    7. Teklemariam, Mekuria Haile & Kwon, Youngsun, 2020. "Differentiating mobile broadband policies across diffusion stages: A panel data analysis," Telecommunications Policy, Elsevier, vol. 44(8).
    8. Kwon, Youngsun & Kim, Buhm-Kyu, 2012. "Royalties vs. upfront lump-sum fees in data communication environments," Telecommunications Policy, Elsevier, vol. 36(2), pages 127-139.
    9. Liao, Chun-Hsiung & Lien, Chun-Yu, 2012. "Measuring the technology gap of APEC integrated telecommunications operators," Telecommunications Policy, Elsevier, vol. 36(10), pages 989-996.
    10. Nakamura, Akihiro, 2013. "Retaining telecommunication services when universal service is defined by functionality: Japanese consumers' willingness-to-pay," Telecommunications Policy, Elsevier, vol. 37(8), pages 662-672.
    11. Queder, Fabian & Lehr, William & Haucap, Justus, 2020. "5G and Mobile Broadband Disruption," ITS Conference, Online Event 2020 224872, International Telecommunications Society (ITS).
    12. Kwon, Youngsun & Kwon, Joungwon, 2017. "Telecommunications Policy: An evaluation of 40 years' research history," 28th European Regional ITS Conference, Passau 2017 169475, International Telecommunications Society (ITS).
    13. Yan Li & Russell Pitman, 2012. "The proposed merger of AT & T and T-mobile: Are there unexhausted scale economies in US mobile telephony?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2012-07, Centre for Competition Policy, University of East Anglia, Norwich, UK..

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