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Cross-Subsidization in Telecommunications

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  • Parsons, Steve G

Abstract

The Telecommunications Act and FCC and state commission orders have made the proper consideration of cross-subsidization increasingly important. This article briefly surveys the economics literature on cross-subsidization. Caveats regarding the application of the theory to telecommunications, including cross-elastic effects, zero economic profit assumptions, and mistaken identification of loop costs as common production costs, are discussed. The patterns of cross-subsidy and claims of their existence in the industry are considered. The FCC's recent orders are discussed in the context of the relevant economics literature. Copyright 1998 by Kluwer Academic Publishers

Suggested Citation

  • Parsons, Steve G, 1998. "Cross-Subsidization in Telecommunications," Journal of Regulatory Economics, Springer, vol. 13(2), pages 157-182, March.
    • Handle: RePEc:kap:regeco:v:13:y:1998:i:2:p:157-82
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    Cited by:

    1. Haller Andreas & Christian Jaag & Urs Trinkner, 2014. "USO cost allocation rules and welfare," Working Papers 0049, Swiss Economics.
    2. Parsons, Steve G. & Duffy-Deno, Kevin T., 2021. "Are telecommunications regulators correct in their beliefs that network size affects origination/termination?," Telecommunications Policy, Elsevier, vol. 45(2).
    3. Steve Parsons, 2002. "Laffont and Tirole's Competition in Telecommunications : A View From the US," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 419-436.
    4. David Lowing & Léa Munich & Kevin Techer, 2024. "Allocating the common costs of a public service operator: an axiomatic approach," Working Papers 2024-05, CRESE.
    5. Urs Trinkner & Christian Jaag & Andreas Haller, 2019. "Funding Universal Services: Cross-subsidization and Net cost balancing," Working Papers 0064, Swiss Economics.
    6. Garbacz, Christopher & Thompson, Herbert Jr., 2005. "Universal telecommunication service: A world perspective," Information Economics and Policy, Elsevier, vol. 17(4), pages 495-512, October.

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