An Econometric Assessment of Telecommunications Prices and Consumer Surplus in Mexico Using Panel Data
1 June 2013
By Dr. Agustin J. Ros with Dr. Jerry A. Hausman, the John and Jennie S. MacDonald Professor of Economics at MIT
In this article from the Journal of Regulatory Economics, NERA Vice President Dr. Agustin J. Ros and Jerry A. Hausman, the John and Jennie S. MacDonald Professor of Economics at MIT, analyze telecommunications prices in Mexico by using a panel data of countries similar to Mexico to estimate demand models for mobile and fixed-line telecommunications. The authors find that Mexico's actual mobile and fixed-line prices are below the predicted prices based on similar countries' prices. Furthermore, Mexican consumers are paying lower prices than what one would expect based on comparisons of comparable countries. Dr. Ros and Professor Hausman calculate that, in 2011, Mexican consumers received at least $4–5 billion (USD) in consumer surplus from these lower mobile prices and, in 2010, they received over $1 billion (USD) in consumer surplus from these lower fixed-line prices. These findings are in contrast to the general perception that concentrated telecommunications markets in Mexico are resulting in high prices and harming consumers.
