Política de Preços do Sector das Telecomunicações: Uma Análise de Equilíbrio Geral

Abstract

This paper is concerned with the impact of different pricing policies in the Portuguese telecommunications industry. The focus is on the efficiency and distributive effects of each policy. We make use of a computational general equilibrium (CGE) model of the Portuguese economy, thus taking into account the direct as well as the indirect effects of each change in telecommunications prices. The CGE model of the Portuguese economy, which was specially designed to analyse the telecommunications industry, includes two factors of production, eight "consumers" (i.e. groups of consumers), nine consumption goods (including telecommunications), and 14 production sectors, one of which is the telecommunications industry. Since almost 100% of the capital in the three-firm telecommunications industry is state owned, we consider it as consisting of a single state owned firm. We assume there are increasing returns to scale in the provision of telecommunications services, while the remaining industries operate under constant returns to scale. The simulations are restricted to linear pricing policies. This means that the level of tariffs, not the structure, is being analysed. It is assumed that any variation in the profits of the telecommunications "firm" is compensated by a variation in personal income taxes, such that the government deficit remains constant. The various pricing policies are compared with a base case in which price is fixed g the level of average cost. The main conclusions of the paper are the following. From a distributive point of view, there is a "positive" effect associated with an increase of the level of telecommunications prices, in the sense that there is a transfer of income from wealthy to poor consumers. There are two reasons for this effect. First, the consumption of telecommunications services is more "progressive" than the personal income tax itself. Second, an increase in the price of telecommunications implies a decrease in the price of capital, which affects mainly the wealthy consumers. From an efficiency point of view, however, there is a negative effect associated with an increase of the level of telecommunications prices. Pricing/above average cost implies a deviation from marginal cost as well, and this in turn implies some efficiency loss. In particular, if there are large economies of scale, the efficiency loss may be quite large. On the other hand, the efficiency losses associated with income taxation seem not to be very large, which furthermore justifies marginal-cost pricing as the optimal policy from an efficiency point of view.