The Effect of Private Interests on Regulated Retail and Wholesale Prices

Posted: 30 Aug 2007

See all articles by Bradley S. Wimmer

Bradley S. Wimmer

University of Nevada, Las Vegas - College of Business - Department of Economics

Scott Savage

University of Colorado at Boulder - Department of Economics

Gregory L. Rosston

Stanford Institute for Economic Policy Research

Abstract

This paper examines how regulators behave in markets when there is a tension between retail competition and cross subsidy. Using retail and wholesale prices from Regional Bell Operating Company territories, and price-cost margins as a proxy for political influence, we find that private interests influence the structure of retail prices, especially favoring rural residential customers. Political influence also extends to wholesale access prices, although the magnitude of its effect is small. Federal high-cost universal service payments to a state do not reduce prices in that state's rural areas, but instead lower urban business prices.

Keywords: competition, political contributions, prices, private interest, regulation, telecommunications, universal service

JEL Classification: L51, L96

Suggested Citation

Wimmer, Bradley S. and Savage, Scott and Rosston, Gregory L., The Effect of Private Interests on Regulated Retail and Wholesale Prices. Journal of Law and Economics, Vol. 51, 2007. Available at SSRN: https://ssrn.com/abstract=1010700

Bradley S. Wimmer

University of Nevada, Las Vegas - College of Business - Department of Economics ( email )

4505 S. Maryland Parkway
Las Vegas, NV 89154
United States

Scott Savage

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-735-1165 (Phone)
303-492-1112 (Fax)

HOME PAGE: http://holiday.colorado.edu/savages/

Gregory L. Rosston (Contact Author)

Stanford Institute for Economic Policy Research ( email )

Landau Economics Building
579 Serra Mall at Galvez St.
Stanford, CA 94305-6015
United States

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