Telephone Communications in Canada: Demand, Production, and Investment Decisions
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abstract
This paper presents a portion of an econometric model of the
telecommunications industry in Canada, specifically dealing with demand,
production, and investment decisions in the telephone sector. Following
an introductory sketch of the structure of the sector is an analysis of
demand for service, broken down where possible into business and
residence, local and toll, categories. Estimation follows the procedures
established by Houthakker and Taylor; the results suggest the presence of
significant elements of habit formation with high income elasticities in
all classes of demand for service, but indicate a substantial degree of
price elasticity only in household demand for toll service.
