Hedonic modeling to explore the relationship of cell phone plan price and quality in Croatia

Since 2009, the Croatian mobile market has been subject to various negative influences, including the economic crisis and a 6% telecommunication tax on mobile operator gross revenues. This paper took advantage of this tumultuous period to explore the effects of quality change on monthly price of cell phone plans in Croatia during 2009-2013. We used hedonic modeling to calculate hedonic price and quality indices over the period. The results indicate that cell phone plan prices slowly fell rather than rose, and that plan quality increased. The results are consistent with trends in other European countries with similar market conditions.