Regulation and Measurement of the Productivity Offset

Noel D. Uri
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Noel D. Uri: Common Carrier Bureau, Federal Communications Commission, Washington, DC

Economic Analysis and Policy (EAP), 2001, vol. 31, issue 2, pages 187-203

Abstract: Calculation of the productivity offset or the X-factor used in setting price caps has a fundamental flaw when it is based on conventional growth accounting total factor productivity analysis. The problem is discussed in the context of incentive regulation used by the Federal Communications Commission in the United States and the appropriate correction is indicated. An example of the problem and its correction, using the access charge for interstate service in telecommunications, is provided. The correction shows that the appropriate X-factor is 9% greater than that based on conventional growth accounting total factor productivity analysis.

Keywords: Accounting; Factor Productivity; Productivity; Regulation; Telecommunication (search for similar items in EconPapers)
JEL-codes: D24 L98 L51 L96 M41 (search for similar items in EconPapers)
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