The Changing Structure of Cost and Demand for the U.S. Telecommunications Industry

43 Pages Posted: 9 May 1998 Last revised: 15 May 2000

See all articles by M. Ishaq Nadiri

M. Ishaq Nadiri

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Banani Nandi

Consumer Lab

Date Written: November 1996

Abstract

This paper formulates a multiproduct structural model to examine the evolution of the structure of production and demand and the dynamic interaction between the two in the context of the U.S. telecommunications industry over an extended period, from 1935 to 1987. We estimate the degree of scale economies, cost elasticities, input price elasticities and the determinants of output demand. The contribution of the quasi-fixed inputs, such as R&D and physical capital, in the evolution of this industry are examined. Using our analytical framework and a long sample period, we examine a number of important issues such as the stability of the cost and demand structure over time, the changing characteristics of demand for local and toll services and the variation of price-cost margin over time under different economic conditions, market structures and regulatory environments. Use of this approach makes it possible to analyze the effects of the 1984 divestiture of the Bell System on the cost structure, employment and capital formation of the telecommunications industry in the U.S.

Suggested Citation

Nadiri, M. Ishaq and Nandi, Banani, The Changing Structure of Cost and Demand for the U.S. Telecommunications Industry (November 1996). NBER Working Paper No. w5820. Available at SSRN: https://ssrn.com/abstract=3194

M. Ishaq Nadiri (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States
212-998-8968 (Phone)
212-995-4013 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Banani Nandi

Consumer Lab ( email )

Murray Hill, NY 07974
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
41
Abstract Views
1,341
PlumX Metrics