Hedonic Price indexes for Mobile Telephony services and Firms’ Pricing-Quality Behaviors in France

This paper adopts the hedonic price theory to analyze the relation between quality and price in the mobile telephony market during 1996-2002 in France. We address several questions. We first develop quality-adjusted price indexes for the whole period. We find that price index decline at about 14% from 1997 to 1999 while on the remaining period the price decrease tends to flatten. Then, using estimates from hedonic-price separate equations by operator and formal tests, the assumption that pricing behavior of operators is homogenous was not rejected. Furthermore, quality indexes are also calculated. The results of a comparative analysis indicates that on the period 2000-2002 neither the quality nor the price indexes chow significant change for the three-operators. Theses results are of some consequence, especially after the French antitrust authority decision in December 2005 about the existence of a collusion on the mobile market during the same period (2000-2002).