CIRJE-F-550 "Substituability between Mobile and Fixed Telephones: Evidence and Implications for India"
Author Name Narayana, Muttur Ranganathan
Date March 2008
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Remarks Revised in May 2008; forthcoming as "Substitutability between mobile and fixed phones: Evidence and implications for India", Review of Urban and Regional Development Studies (2010).

Substitutability between mobile and fixed phones is an important consequence of India's telecom sector's deregulation since 1991. This paper tests for substitutability between mobile and fixed phones, based on a binary logit model and using the household sample survey data from the Karnataka State in South India. Estimated cross price elasticity offers empirical evidence for substitutability rather than complementarity between fixed and mobile phone services. This evidence is symmetric in mobile and fixed phone models. The empirical results have implications for on-going policy discussion on subsidization by the Access Deficit Charge and for changing the bases for Universal Service Obligation.