Incentive regulation and the change in productive efficiency in telecommunications in the United States

Noel D. Uri

Applied Stochastic Models in Business and Industry, 2001, vol. 17, issue 3, 231-244

Abstract: Incentive regulation has become an important regulatory tool in the telecommunications industry in the United States. The issue explored here is whether incentive regulation has resulted in an increase in productive efficiency. After providing an overview of the nature of incentive regulation, a methodology for measuring technical inefficiency and its change is introduced. This is a stochastic frontier production function approach reflecting technical inefficiency effects. The results of implementing this methodology suggest that in the production of interLATA billed access minutes for interstate calls, there was no change in technical efficiency, something that incentive regulation was specifically designed to enhance. Finally, an assessment of technical efficiency across individual LECs in the United States indicates considerable variability. Published in 2001 by John Wiley & Sons, Ltd.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:wly:apsmbi:v:17:y:2001:i:3:p:231-244

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