59 Pages Posted: 17 Feb 2012
Date Written: February 16, 2012
In recent years, twelve U.S. states have liberalized price controls on basic telephone services, and several others are considering doing so. To assess the impact of these changes, we collected and analyzed a comprehensive data set on basic telephone prices and on the specific characteristics of price regulation in 95 cities. Our analysis demonstrates that the removal of price controls on basic telephone service has, if anything, led to lower rates, indicating that competition has developed to the point where price controls are no longer necessary. Given well-documented evidence of the distortions caused by unnecessary price controls, and the benefits of liberalization for consumers in particular and economic growth overall, we conclude that states should expedite the liberalization of price controls on basic telephone service.
Suggested Citation: Suggested Citation
Eisenach, Jeffrey A. and Caves, Kevin W., The Effects of Liberalizing Price Controls on Local Telephone Service: An Empirical Analysis (February 16, 2012). Available at SSRN: https://ssrn.com/abstract=2006594 or http://dx.doi.org/10.2139/ssrn.2006594