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Optimal Local Exchange Carrier Size

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  • Sumit K. Majumdar
  • Hsi-Hui Chang

Abstract

Optimal firm size and patterns of returns to scale among the local exchange companies in the U.S. telecommunications industry are estimated for the years: 1975, 1978, 1981, 1984, 1987 and 1990. The independent companies display increasing returns to scale, while the Baby Bells display constant or decreasing returns to scale. The independent companies operate at a scale smaller than optimal size, while the Baby Bells operate at a scale greater than optimal size. Efficiencies can be gained by industry restructuring, by allowing independents to expand their size while the Baby Bells can be downsized to create smaller units.

Suggested Citation

  • Sumit K. Majumdar & Hsi-Hui Chang, 1998. "Optimal Local Exchange Carrier Size," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(6), pages 637-649, December.
    • Handle: RePEc:kap:revind:v:13:y:1998:i:6:p:637-649
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    Cited by:

    1. Sumit Majumdar, 1999. "Comparative Organizational Characteristics of Indian State-Owned Enterprises," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(2), pages 165-182, September.
    2. K. Mert Cubukcu & Jean-Michel Guldmann, 2008. "Geography and the costs of local telephone networks," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(4), pages 821-842, December.
    3. Liao, Chun-Hsiung & Lin, Hsing-Yung, 2011. "Measuring operational efficiency of mobile operators in Japan and Korea," Japan and the World Economy, Elsevier, vol. 23(1), pages 48-57, January.
    4. Russell Pittman, 2001. "Vertical Restructuring of the Infrastructure Sectors of Transition Economies," Industrial Organization 0111002, University Library of Munich, Germany.

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