What is the magnitude of fixed-mobile call substitution? Empirical evidence from 16 European countries

This paper investigates the degree of fixed-mobile call substitution (FMCS) within different European countries. We use quarterly data from 2004 to mid-2010 on 16 mainly Western European countries. By applying dynamic panel data techniques, we are able to estimate short- and long-run elasticities of the telecommunication usage prices on the fixed-line call demand. The own-price and cross-price elasticities found give strong empirical evidence for substitutional effects towards mobile services. In particular, the estimated cross-price elasticities of the mobile price on the fixed-line call demand are relatively large compared to other studies.