Incentive Regulation and Productive Efficiency in the U.S. Telecommunications Industry

JOURNAL OF BUSINESS, Vol. 70, No. 4, October 1997

Posted: 10 Sep 1997

See all articles by Sumit K. Majumdar

Sumit K. Majumdar

University of Texas at Dallas - Department of Information Systems & Operations Management

Abstract

This study evaluates the effect of incentive regulation on the productivity of U.S. local exchange carriers between 1988 and 1993. Introducing pure price-cap schemes has a strong and positive, but lagged, effect on technical efficiency. Where price-cap schemes operate in conjunction with an earnings- sharing scheme, there is immediate effect on technical efficiency, but the impact is less strong than the effect of a pure price-caps scheme. Where only an earnings-sharing scheme operates, its effect is detrimental to technical efficiency. Weaker, though broadly positive, results are obtained as to the effect of incentive regulation on scale efficiency.

JEL Classification: L43, L96

Suggested Citation

Majumdar, Sumit K., Incentive Regulation and Productive Efficiency in the U.S. Telecommunications Industry. JOURNAL OF BUSINESS, Vol. 70, No. 4, October 1997. Available at SSRN: https://ssrn.com/abstract=10884

Sumit K. Majumdar (Contact Author)

University of Texas at Dallas - Department of Information Systems & Operations Management ( email )

SM 33
800 W Campbell
Richardson, TX 75080
United States
972-883-4786 (Phone)
972-883-4841 (Fax)

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