Dominant carrier market power in US international telephone markets

James Alleman, Gary Madden and Scott Savage

Applied Economics, 2003, vol. 35, issue 6, 665-673

Abstract: An econometric model is used to examine market power in US international telephone markets. Lerner index estimates suggest AT&T's collection rate-cost margin was between 12% and 24% during 1991 to 1995. Although Lerner estimates imply deadweight welfare losses of up to US $261 million per annum, such losses are small compared to those from the inefficient pricing of international interconnection. Settlement rate-cost margins on US bilateral markets of approximately 89% translate into a US $4907 million transfer from consumers to carriers in 1995.

Date: 2003
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DOI: 10.1080/0003684022000040957

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