Recent Empirical Evidence on Discrimination by Regulated Firms
Review of Network Economics, Vol. 1, March 2002
15 Pages Posted: 14 Feb 2003
Well-established economic principles show that regulated monopolies may have an incentive to act discriminatorily against rivals of their unregulated affiliates. This paper discusses some recent empirical evidence regarding discrimination in telecommunications. Specifically, it surveys anecdotal and systematic evidence that LECs discriminate against unaffiliated providers of mobile telephony. Evidence regarding discrimination by LECs against rival local phone companies is also discussed. At the same time, the evidence suggests that allowing LECs to enter cellular telephony may result in higher-quality or lower-cost cellular phone provision. These findings provide evidence that discrimination is a real phenomenon, and that there is a policy trade-off between preventing discrimination (by mandating separation) and realizing economies of scope.
Keywords: non-price discrimination, cellular telephones, regulated industries, empirical evidence
JEL Classification: L96, D42, L51
Suggested Citation: Suggested Citation