Incentive Regulation and Productive Efficiency in the U.S. Telecommunications Industry
JOURNAL OF BUSINESS, Vol. 70, No. 4, October 1997
Posted: 10 Sep 1997
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: Suggested Citation