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Does the Introduction of Competition Improve Cost Efficiency? The Case of a State-Owned Telecommunications Company

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  • Veerasak Mongkolporn
  • Xiangkang Yin

Abstract

This paper examines the cost structure of the Telephone Organization of Thailand (TOT) with particular interest in the 1993 concessions that allow private companies to enter the market. Our empirical evidence demonstrates that the concessions generated an upward shift for both long run and short-run cost curves and this shift is likely to be caused by the reduction in scale economies in the post-concession period. The estimations of partial elasticities of substitutions show that labour is a substitute for capital and materials but capital and material are complements. In addition, the price elasticity of labour is greater than those of capital and material (in absolute terms), which reflects the firm's greater sensitivity in labour employment.

Suggested Citation

  • Veerasak Mongkolporn & Xiangkang Yin, 2006. "Does the Introduction of Competition Improve Cost Efficiency? The Case of a State-Owned Telecommunications Company," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 11(3), pages 355-369.
    • Handle: RePEc:taf:rjapxx:v:11:y:2006:i:3:p:355-369
    DOI: 10.1080/13547860600764013
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    Cited by:

    1. Johannah Branson, 2008. "Competition policy in ASEAN - Case studies," Macroeconomics Working Papers 22347, East Asian Bureau of Economic Research.
    2. Johannah Branson, 2008. "Competition Policy in ASEAN: Case Studies," Asia Pacific Economic Papers 374, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.

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