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Short-term Relationship between Mobile Phone Rates per Rounded Minute and per Second

Author

Listed:
  • Eduardo Martínez Chombo

    (Director General de Proyectos de Resoluciones y Acuerdos “B”, Comisión Federal de Telecomunicaciones (COFETEL). México, D.F. Mexico.)

  • Salvador Flores Santillán

    (Asesor del Comisionado “B”, Comisión Federal de Telecomunicaciones (COFETEL). México, D.F. Mexico.)

Abstract

We developed a model to analyze the short term relationship between mobile phone charges per rounded minute and per second, in a context where tariffs are freely determined. We assumed profit maximizing firms and an exponential distribution for mobile call duration. Among the results, we found that charges per second are significantly greater than charges per rounded minute, and lower average call duration is related to a greater difference between rates. The results of the model, calibrated with OECD estimates, are consistent with empirical evidence.

Suggested Citation

  • Eduardo Martínez Chombo & Salvador Flores Santillán, 2013. "Short-term Relationship between Mobile Phone Rates per Rounded Minute and per Second," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(3, Cierre), pages 319-331.
    • Handle: RePEc:emc:ecomex:v:22:y:2013:i:3:p:319-331
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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/Cierre-1/09_EM_E_Martinez_Chombo_(319-331).pdf
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    More about this item

    Keywords

    telecommunications; mobile telephony; mobile pricing; exponential distribution.;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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