Development of comminication sector in Turkey and demand analysis with panel data

Communication is one of the vital necessities. Nowadays the increase in demand for communication services has been continuing with a momentum that is in parallel with the increase in diversities of digital platforms. However, it could be said that the demands for the communication tools shapes the demands of communication sector. The demand for fixed line services has been declining in Turkey, as elsewhere in the world, while the demand for GSM and broadband internet services has been increasing. This study employed a comparative approach to analyse the types of expenditures and calculate the price and income (expenditure) elasticities of households living in 26 regions of Turkey in terms of 12 groups of product between the years of 2002-2009. For this purpose, Expended Linear Expenditure System (ELES) was utilized. The model was estimated under constraints of demand theory. The findings of the study revealed that the income (expenditure) elasticities for each product were calculated as positive, while price elasticities for each product were calculated as negative. The data about the consumption patterns of households in the study, covered the earlier works on the overall results of Turkey and corrected Engel's curves. The findings also suggested that food and non-alcoholic beverage consumption and expenditure on clothing and footwear were considered as necessities, while transport, recreation and culture, restaurants and hotel were considered as luxury good. The value of income (expenditure) and price elasticities of housing and rent, medical care and communication was approximately 1. Hence, this expenditures demand could be regarded as unit elastic. Thus, it could be said that these expenditures are the goods of the first order. Since the increase in the prices of communication expenditures in line with the increases in taxes cannot bring about significant changes withinexpenditure outputs, there should be a discount in the communication taxes in Turkey.Key Words:1.Turkey2.Demand Analysis3.Expended Linear Expenditure System4.Income Elasticity of Demand and Price Elasticity of Demand5.Budget Share