An Econometric Model of International Long Distance Calls in Chile

Abstract

The paper presents an econometric model of international long distance (ILD) calls originated during the period January 1986-February 1991. The model is estimated using monthly data. It comprises two submodels that are jointly estimated. The first submodel explains the total number of ILD calls and how they are allocated among categories of services: International Direct Dialing and Operator Assisted. The second submodel explains the length of the call and how the minutes are allocated among the services. Main results that emerge from the estimation are: 1) Both he number and length of ILD calls are price-elastic, the elasticities being -1.2 and -1.3 respectively; 2) The length of the calls is relatively more sensitive to price than the number of calls; 3) As expected, the level of activity of the economy has a significant positive effect on the number and length of calls; and 4) The number of telephone lines in service has also a positive effect on the number of ILD calls.