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Telecommunications Regulation and New Services: a Case Study at the State Level

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  • James E. Prieger

    (Department of Economics, University of California Davis)

Abstract

The effects that regulation has on the innovation and the introduction of new telecommunications services have not been previously quantified in the literature. This study compares state-regulated services in Indiana under rate of return regulation (RoRR) and under alternative regulation. The econometric model comprises an count process (for innovation) followed by a duration process with selection (for regulatory delay). Moving away from RoRR increased the rate of service creation to three times the old rate. Expected approval delays nearly disappear. A prediction exercise indicates that the firm would have introduced 12 times as many services to consumers if the alternative regulation had been in place the entire time.

Suggested Citation

  • James E. Prieger, 2003. "Telecommunications Regulation and New Services: a Case Study at the State Level," Working Papers 259, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:259
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    References listed on IDEAS

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    1. Sappington, David E. M. & Weisman, Dennis L., 1996. "Potential pitfalls in empirical investigations of the effects of incentive regulation plans in the telecommunications industry," Information Economics and Policy, Elsevier, vol. 8(2), pages 125-140, June.
    2. Greenstein, Shane & McMaster, Susan & Spiller, Pablo T, 1995. "The Effect of Incentive Regulation on Infrastructure Modernization: Local Exchange Companies' Deployment of Digital Technology," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(2), pages 187-236, Summer.
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    4. Bonanno, Giacomo & Haworth, Barry, 1998. "Intensity of competition and the choice between product and process innovation," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 495-510, July.
    5. Cabral, Luis M B & Riordan, Michael H, 1989. "Incentives for Cost Reduction under Price Cap Regulation," Journal of Regulatory Economics, Springer, vol. 1(2), pages 93-102, June.
    6. Barten, Anton P., 1997. "Annual report 1996," European Economic Review, Elsevier, vol. 41(3-5), pages 971-973, April.
    7. Ai, Chunrong & Sappington, David E M, 2002. "The Impact of State Incentive Regulation on the U.S. Telecommunications Industry," Journal of Regulatory Economics, Springer, vol. 22(2), pages 133-159, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. James E. Prieger, 2004. "The Impacts of the Americans with Disabilities Act on the Entry and Exit of Retail Firms," Econometric Society 2004 North American Winter Meetings 589, Econometric Society.
    2. Torsten J. Gerpott, 2006. "Innovationen und Regulierung in der Telekommunikationswirtschaft," Schmalenbach Journal of Business Research, Springer, vol. 58(54), pages 133-153, January.
    3. Mark Frank, 2003. "An Empirical Analysis of Electricity Regulation on Technical Change in Texas," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(4), pages 313-331, June.
    4. Bauer, Johannes M. & Shim, Woohyun, 2012. "Regulation and digital innovation: Theory and evidence," 23rd European Regional ITS Conference, Vienna 2012 60364, International Telecommunications Society (ITS).
    5. James E. Prieger, 2005. "Estimation of a Simple Queuing System WithUnits-in-Service and Complete Data," Working Papers 535, University of California, Davis, Department of Economics.
    6. James E. Prieger, 2005. "Endogenous Regulatory Delay and the Timing of Product Innovation," Working Papers 54, University of California, Davis, Department of Economics.
    7. James E. Prieger, 2005. "Endogenous Regulatory Delay and the Timing of Product Innovation," Working Papers 86, University of California, Davis, Department of Economics.
    8. James Prieger, 2008. "Product innovation, signaling, and endogenous regulatory delay," Journal of Regulatory Economics, Springer, vol. 34(2), pages 95-118, October.
    9. Prieger, James E., 2007. "Regulatory delay and the timing of product innovation," International Journal of Industrial Organization, Elsevier, vol. 25(2), pages 219-236, April.
    10. James E. Prieger, 2005. "Estimation of a Simple Queuing System WithUnits-in-Service and Complete Data," Working Papers 37, University of California, Davis, Department of Economics.

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    More about this item

    Keywords

    regulation; product innovation; telecommunications; count data; duration data; tobit model;
    All these keywords.

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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