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The cost structure of Australian telecommunications

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Author Info
Bloch, Harry
Madden, Gary G
Coble-Neal, Grant

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Abstract

Since 1991 Australian telecommunications has undergone substantial reform. To a large extent, the economic correctness of pro-competitive policy depends on the non-existence of natural monopoly technology. This paper provides estimates of the Australian telecommunications system cost structure, and tests for subadditivity from 1943 to 1991. Additivity of the cost function after 1945 rejects the natural monopoly hypothesis and supports recent government policy. Diminished natural monopoly characteristics suggest that co-ordination between firms through networking can achieve similar economies as internal co-ordination within a monopoly. This finding is important, given the trend towards network unbundling, and service provision through interconnection.

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File URL: http://mpra.ub.uni-muenchen.de/11019/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11019.

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Date of creation: 2001
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Publication status: Published in The Economic Record 239.77(2001): pp. 338-350
Handle: RePEc:pra:mprapa:11019

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Keywords: Cost structure of Australian telecommunications;

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Find related papers by JEL classification:
L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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  7. Kjell G. Salvanes & Sigve Tjøtta, 1998. "A Test for Natural Monopoly with Application to Norwegian Electricity Distribution," Review of Industrial Organization, Springer, vol. 13(6), pages 669-685, December. [Downloadable!]
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  12. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January. [Downloadable!] (restricted)
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  13. Foreman, R Dean & Beauvais, Edward, 1999. "Scale Economies in Cellular Telephony: Size Matters," Journal of Regulatory Economics, Springer, vol. 16(3), pages 297-306, November. [Downloadable!] (restricted)
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