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Explaining the Choice among Regulatory Plans in the U.S. Telecommunications Industry

  • Donald, Stephen G
  • Sappington, David E M

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. Copyright 1995 by MIT Press.

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Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 4 (1995)
Issue (Month): 2 (Summer)
Pages: 237-65

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Handle: RePEc:bla:jemstr:v:4:y:1995:i:2:p:237-65
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