Pricing policies in selected European telephone systems

Bridger M. Mitchell

Expert InsightsPublished 1978

In telephone systems of Norway, Sweden, Switzerland, the United Kingdom, and West Germany there are four categories of charges: installation fee, monthly subscription fee, local usage charges, and rates for trunk calls. Rates for local calls are based on number and duration of calls. Rate structure for trunk calls is based on call duration and distance, with reduced charges in off-peak hours. Response to time-of-day rates is assessed by comparing trunk traffic patterns before and after rate structure changes in five countries, including the United States. Data indicate that price incentives can significantly alter traffic patterns. Development of a model of peak-load pricing must incorporate the nonuniform interhour cross-elasticity effects observed in responses to rate structure changes.The most important features of own-price elasticities, trends in usage, as well as externality effects can also be included in the model for assessing telephone rate structure policy.

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Mitchell, Bridger M., Pricing policies in selected European telephone systems. Santa Monica, CA: RAND Corporation, 1978. https://www.rand.org/pubs/papers/P6169.html.
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