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Effect of Network Unbundling on Retail Prices: Evidence from the Telecommunications Act of 1996

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  • Gregory L. Rosston
  • Scott J. Savage
  • Bradley S. Wimmer

Abstract

This paper empirically examines the effects of network unbundling on retail prices in U.S. local telephone markets. Panel data for 7,604 wire centers in 43 states from 1996 to 2002 are used to estimate the price effects from the unbundling and entry-promoting conditions of the Telecommunications Act. Results show that Section 271 led to the rebalancing of prices between customer groups in which residential prices increased and the prices paid by small businesses decreased. There is some rebalancing of prices between urban and rural regions, with business prices decreasing by a larger amount in urban regions. Our results from all markets indicate that regulators responded rationally to competition by rebalancing prices to reduce cross subsidies.

Suggested Citation

  • Gregory L. Rosston & Scott J. Savage & Bradley S. Wimmer, 2013. "Effect of Network Unbundling on Retail Prices: Evidence from the Telecommunications Act of 1996," Journal of Law and Economics, University of Chicago Press, vol. 56(2), pages 487-519.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/667995
    DOI: 10.1086/667995
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    References listed on IDEAS

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    Cited by:

    1. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    2. Jacob Malone & Aviv Nevo & Jonathan Williams, 2016. "The Tragedy of the Last Mile: Congestion Externalities in Broadband Networks," Working Papers 16-20, NET Institute.
    3. I. Vogelsang, 2015. "Will the U.S. and EU telecommunications policies converge? A survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 117-155, June.
    4. Brian McManus & Aviv Nevo & Zachary Nolan & Jonathan W. Williams, 2020. "Steering Incentives of Platforms: Evidence from the Telecommunications Industry," NBER Working Papers 27083, National Bureau of Economic Research, Inc.

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