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Regulation and the Vertically Integrated Firm: The Case of RBOC Entry into Interlata Long Distance

  • Weisman, Dennis L
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    Congress is considering telecommunications reform legislation that would allow the Regional Bell Operating Companies (RBOCs) to enter the interLATA long-distance market. A concern is that a vertically-integrated RBOC would be able to discriminate against its rivals. A proposed remedy would require the RBOCs to reduce their access market share as a precondition to interLATA entry. We show formally that such a precondition likely contributes to higher long-distance prices and enhances the risk of discrimination. Furthermore, the lower the share of access profits retained by an RBOC, the weaker are its incentives to lower long-distance prices. Copyright 1995 by Kluwer Academic Publishers

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    Article provided by Springer in its journal Journal of Regulatory Economics.

    Volume (Year): 8 (1995)
    Issue (Month): 3 (November)
    Pages: 249-66

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    Handle: RePEc:kap:regeco:v:8:y:1995:i:3:p:249-66
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