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Technical Efficiency, Allocative Efficiency, and the Implementation of a Price Cap Plan in Telecommunications in the United States

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  • Noel D. Uri

Abstract

Incentive regulation is designed to improve productive efficiency, enhance service quality and consumer welfare, and reduce the costs of regulation. The issue that is considered here is whether incentive regulation in the form of a price cap applicable to interstate access service to local loops in the telecommunications industry in the United States has resulted in an increase in the technical efficiency and allocative efficiency of local exchange carriers. The results suggest that for changes in technical efficiency, there is a definite randomness between 1985 and 1993 with technical efficiency increasing in some years and decreasing in others. Subsequent to 1993, however, there is a consistent improvement in technical efficiency. Given that incentive regulation in the form of price caps was implemented in 1991, it is likely that some portion of the improvement in technical efficiency subsequent to 1993 is attributable to incentive regulation.

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  • Noel D. Uri, 2001. "Technical Efficiency, Allocative Efficiency, and the Implementation of a Price Cap Plan in Telecommunications in the United States," Journal of Applied Economics, Taylor & Francis Journals, vol. 4(1), pages 163-186, May.
    • Handle: RePEc:taf:recsxx:v:4:y:2001:i:1:p:163-186
    DOI: 10.1080/15140326.2001.12040562
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    Cited by:

    1. Christian von Hirschhausen & Astrid Cullmann & Andreas Kappeler, 2006. "Efficiency analysis of German electricity distribution utilities - non-parametric and parametric tests," Applied Economics, Taylor & Francis Journals, vol. 38(21), pages 2553-2566.
    2. Xueyan Wang & Hong Wu & Lu Lu, 2021. "A Novel Service Provision Mode for Sustainable Development of the Telecom Industry," Sustainability, MDPI, vol. 13(9), pages 1-15, May.
    3. Anang, Benjamin Tetteh & Shafiwu, Adinan Bahahudeen, 2022. "Profit Efficiency of Smallholder Maize Farmers in Sagnarigu Municipal of Northern Ghana," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 25(2), December.
    4. Bielov, Constantine & Mitomo, Hitoshi & Hämmäinen, Heikki, 2021. "Efficiency Frontier of World MNOs: Multinational vs Domestic," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238011, International Telecommunications Society (ITS).
    5. Nongluk Buranabunyut & James Peoples, 2012. "An empirical analysis of incentive regulation and the allocation of inputs in the US telecommunications industry," Journal of Regulatory Economics, Springer, vol. 41(2), pages 181-200, April.
    6. Kėdaitis Vytautas & Mikučionytė Žymantė & Baležentis Tomas & Valkauskas Romualdas, 2017. "Profit Efficiency in Lithuanian Credit Unions – A Dea Approach," Ekonomika (Economics), Sciendo, vol. 96(3), pages 90-101, January.

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