Demand for Thai Mobile Telecommunications and Market Power Measurement
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Abstract
This research studies how to estimate the demand for goods in the market. This demand-related information will be useful for analyzing competition among operators. The estimation method can use market-level data classified by operator. In addition, demand models using this estimation method must consider the problem of price endogeneity and therefore use the Market Share Inversion method. This method will be applied to Thai mobile telecommunications. From the estimation, it is found that the estimates are consistent with the assumptions of the model. The results of the estimation illustrate that the own-price elasticities of demand are greater than one (absolute value), while the cross-price elasticities of demand are varied. The demand-related information is used to estimate the marginal cost, which demonstrates a downward trend, while the market has larger number of users. This implies economies of scale. When calculating the Lerner Index as an alternative measure of market power, an increasing trend was found, indicating a greater dominance of the market of the operator, with very little change in market structure and tariff, especially for the last ten years. The results of the study can be used for studies of market dominance in Thai mobile telecommunications along with the market share. Regulators can propose various actions to reduce the market power of operators, which is beneficial for the market.
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