A Survey and Estimating Consumer Surplus in the Mobile Telecommunications in Iran

Since consumer surplus is relevant to the controversy over establishing an appropriate price level between consumers and service providers, and policy making, the need for a robust measurement of benefit from mobile telephone services (MTS) is increasing. The aim of this paper is to estimate consumer surplus in Iran MTS for the period of 1373-86. The measured net consumer surplus estimated by means of elasticities of appropriate demand reached about US$7 billion in the period of study. In particular, after competition was introduced (by Talia and Irancell into the market) with an accompanying price decrease and increase in the number of subscribers, consumers have benefited greatly. The estimated consumer surplus in this paper does not include network externality (option externality); if this were considered, the total social welfare of the consumer would be larger.