Crowding Out Or Complementarity In The Telecommunications Market?

There are a substantial number of cases where the a priori relationship between products is not at all clear in the sense that although apparent to be clear substitutes may turn out to be in fact complements, or vice-versa. This paper aims to study the relationship between fixed and mobile telephony in the United Kingdom and, in particular, address the question if mobile communications crowded out fixed telephony or if, on the other hand, the two types of communications are in fact complements. The authors estimate a structural continuous-choice demand model following Pinkse et al. (2002), Pinkse and Slade (2004), and Slade (2004) and they find that at the current diffusion stage, fixed and mobile communications appear to be complements.