Estimating Minimum Efficient Scale of Korean Mobile Telecom Market: Relation between Cost per Minute and Traffic Volume 


Vol. 38,  No. 10, pp. 867-873, Oct.  2013


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  Abstract

Competition policy for growth and activation of market should consider structural nature of relevant industry closely. In this viewpoint, whether domestic MNOs(mobile network operators) are competing while securing the effect of scale economies and maximum production efficiency is an important element when looking for competition policy means of domestic mobile communication market. With this, present study analyzed level of MES (Minimum Efficient Scale) and whether achieving them or not through investigating the relation between the cost per minute and call traffic of domestic MNOs. This analysis is differentiated from existing econometric studies entailing several assumptions by enhancing a reality reflection through directly deducing of cost curve using verified data(cost per minute and call traffic). As a result of analysis, the levels of minimum efficient scale were different from each other between domestic MNOs, and an incumbent MNO(SKT) accomplished minimum efficient scale while entrant MNOs(KT and LGU+) could not yet reach minimum efficient scale level. This result demonstrates a gap exists in production efficiency level among domestic MNOs and implies that the policy to alleviate the gap among operators is required when establishing competitive policy in the future.

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  Cite this article

[IEEE Style]

S. Choi and S. Han, "Estimating Minimum Efficient Scale of Korean Mobile Telecom Market: Relation between Cost per Minute and Traffic Volume," The Journal of Korean Institute of Communications and Information Sciences, vol. 38, no. 10, pp. 867-873, 2013. DOI: .

[ACM Style]

Sae-sol Choi and Sung-soo Han. 2013. Estimating Minimum Efficient Scale of Korean Mobile Telecom Market: Relation between Cost per Minute and Traffic Volume. The Journal of Korean Institute of Communications and Information Sciences, 38, 10, (2013), 867-873. DOI: .

[KICS Style]

Sae-sol Choi and Sung-soo Han, "Estimating Minimum Efficient Scale of Korean Mobile Telecom Market: Relation between Cost per Minute and Traffic Volume," The Journal of Korean Institute of Communications and Information Sciences, vol. 38, no. 10, pp. 867-873, 10. 2013.

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pISSN : 1226 - 4717
eISSN : 2287 - 3880