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Productivity measurement and price cap regulation: Issues for local exchange carriers in the USA

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  • Starkey, Margarete Z
  • Van Pelt, John W

Abstract

The success of price cap regulation depends, in part, on proper specification of the price cap formula's productivity offset. The productivity offset should be based on the long-term trend rate of growth of industry total factor productivity (TFP) to emulate competitive pricing outcomes and provide the proper efficiency-enhancing incentives, and to remain relatively immune from the short-term fluctuations inherent in productivity measures. The measurement of TFP should utilize standard index number techniques to aggregate dissimilar measures of output, capital, labor and other relevant input costs.

Suggested Citation

  • Starkey, Margarete Z & Van Pelt, John W, 1995. "Productivity measurement and price cap regulation: Issues for local exchange carriers in the USA," Telecommunications Policy, Elsevier, vol. 19(2), pages 151-160, March.
    • Handle: RePEc:eee:telpol:v:19:y:1995:i:2:p:151-160
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    Cited by:

    1. Burns, Phil*Estache, Antonio, 1998. "Information, accounting, and the regulation of concessioned infrastructure monopolies," Policy Research Working Paper Series 2034, The World Bank.
    2. Massón-Guerra, José Luis, 2007. "Evolución de la Eficiencia Productiva de una empresa privatizada: El Caso del Grupo Telefónica de España [Productive Efficiency in Telefonica]," MPRA Paper 13463, University Library of Munich, Germany.

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