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Dominant carrier market power in US international telephone markets

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Author Info

  • James Alleman
  • Gary Madden
  • Scott Savage

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.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/0003684022000040957
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 35 (2003)
Issue (Month): 6 ()
Pages: 665-673

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Handle: RePEc:taf:applec:v:35:y:2003:i:6:p:665-673

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  1. Madden, Gary G & Savage, Scott J, 2000. "Market structure, competition, and pricing in United States international telephone service markets," MPRA Paper 11161, University Library of Munich, Germany.
  2. Acton, Jan Paul & Vogelsang, Ingo, 1992. "Telephone Demand over the Atlantic: Evidence from Country-Pair Data," Journal of Industrial Economics, Wiley Blackwell, vol. 40(3), pages 305-23, September.
  3. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October.
  4. George Ford & John Jackson, 2004. "Demand elasticities for international message telephone service," Applied Economics, Taylor & Francis Journals, vol. 36(14), pages 1523-1527.
  5. Kahai, Simran K & Kaserman, David L & Mayo, John W, 1996. "Is the "Dominant Firm" Dominant? An Empirical Analysis of AT&T's Market Power," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 499-517, October.
  6. Munoz, Teresa Garin & Amaral, Teodosio Perez, 1996. "Demand for international telephone traffic in Spain: An econometric study using provincial panel data," Information Economics and Policy, Elsevier, vol. 8(4), pages 289-315, December.
  7. Hackl, Peter & Westlund, Anders H., 1995. "On price elasticities of international telecommunication demand," Information Economics and Policy, Elsevier, vol. 7(1), pages 27-36, April.
  8. Wright, Julian, 1999. "International Telecommunications, Settlement Rates, and the FCC," Journal of Regulatory Economics, Springer, vol. 15(3), pages 267-91, May.
  9. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
  10. Scanlan, Mark, 1998. "Using call-back to demonstrate the discriminatory nature of the proportionate return rule," Telecommunications Policy, Elsevier, vol. 22(11), pages 913-930, December.
  11. Saving, Thomas R, 1970. "Concentration Ratios and the Degree of Monopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(1), pages 139-46, February.
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