Recent Empirical Evidence on Discrimination by Regulated Firms

Review of Network Economics, Vol. 1, March 2002

15 Pages Posted: 14 Feb 2003

See all articles by David Reiffen

David Reiffen

affiliation not provided to SSRN

Michael R. Ward

University of Texas at Arlington - College of Business Administration - Department of Economics; ZEW, Mannheim

Abstract

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

Reiffen, David and Ward, Michael Robert, Recent Empirical Evidence on Discrimination by Regulated Firms. Review of Network Economics, Vol. 1, March 2002, Available at SSRN: https://ssrn.com/abstract=337920 or http://dx.doi.org/10.2139/ssrn.337920

David Reiffen (Contact Author)

affiliation not provided to SSRN

Michael Robert Ward

University of Texas at Arlington - College of Business Administration - Department of Economics ( email )

330 Business Building
Box 19479
Arlington, TX 76019
United States
817-272-3090 (Phone)
817-272-3145 (Fax)

ZEW, Mannheim ( email )

D-68034 Mannheim
Germany

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