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Regulatory bias in the price structure of local telephone services

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  • Carlos Perez Montes

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    (Banco de España)

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    Abstract

    This article combines a discrete choice model of demand for residential local telephone access and an optimal price regulation model to estimate the welfare weights that state regulators place on consumers with different incomes and locations. I find no evidence of a bias towards rural consumers on average, but the relative weight on low income consumers in a geographic area can vary as a function of the proportions of rural and poor population and the political characteristics of the regulator. I also measure the welfare consequences of deviating from total consumer surplus maximization and disconnecting prices from costs

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/12/Fich/dt1201e.pdf
    File Function: First version, January 2012
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    Bibliographic Info

    Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 1201.

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    Length: 76 pages
    Date of creation: Jan 2012
    Date of revision:
    Handle: RePEc:bde:wpaper:1201

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    Keywords: Ramsey prices; regulatory bias; welfare analysis; telecommunications; GMM;

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