Bottom of the Pyramid Expenditure Patterns on Mobile Services in Selected Emerging Asian Countries

Abstract

This article analyzes patterns of expenditure on mobile phone services at the bottom of the pyramid (BoP), following users in six Asian countries: Bangladesh, Pakistan, India, Sri Lanka, the Philippines, and Thailand. We examine whether mobile phone services in the selected countries display characteristics of a luxury good or those of a necessity. We first evaluate the expenditure patterns of mobile phone services among five income groups within the BoP. Then, we estimate the income elasticity of mobile phone services using Engel curves. Based on these analyses, we conclude that mobile phone services are necessities at the BoP. We also find that any increase in price or tax adds the greatest burden on the poorest of the poor. We argue that the current high tax on mobile phone services in developing countries in Asia has an adverse effect on the poor.