An analysis of the double marginalization in telecommunications: the Colombian case

With the objective of estimating the impact on consumers, of a double marginalization scheme in the Colombian telecommunications market, this investigation presents a panel data approach, in which both the wholesale and the retail markets are explored. The current paper aims to understand the inner workings of the relationship between these two sub-markets and to shed some light on the nature of their chain of supply process. In this inquiry it is found that the price elasticity of the wholesale price on the final consumer (-1.29) is greater than the price elasticity that the same price evokes on the retailer (-0.276), enabling us to qualify the distortion that the double marginalization of the price imposes on final consumers.