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E xplaining the C hoice A mong R egulatory P lans in the U.S. T elecommunications I ndustry
Author(s) -
Donald Stephen G.,
Sappington David E. M.
Publication year - 1995
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.1995.00237.x
Subject(s) - competitor analysis , state (computer science) , incentive , earnings , business , population , universal service , telecommunications , economics , public economics , microeconomics , marketing , finance , engineering , computer science , demography , algorithm , sociology
We investigate why different states in the United States choose different regulatory plans in their telecommunications industry. We present a simple theoretical model and an empirical analysis of the issue. We find that a state is more likely to replace rate‐of‐return regulation with incentive regulation when: (1) residential basic local service rates have historically been relatively high; (2) allowed earnings under rate‐of‐return regulation in the state have been either particularly high or particularly low; (3) the state's leaders tend to come from both major political parties, rather than from a single party; (4) the state's urban population is growing relatively rapidly; and (5) the bypass activity of competitors in the state is less pronounced.