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Efficiency Measurement and Regulation in U.S. Telecommunications: A Robustness Analysis

  • Marcelo Resende

The paper investigates the robustness of different efficiency measures that can support the implementation of diverse forms of incentive regulation in the context of U.S. telecommunications. Comparisons, in terms of an output orientation, are considered for efficiency scores obtained from Data Envelopment Analysis (DEA), distance function (with corrected ordinary least squares and a random effects model) and distance function embedded in a stochastic frontier framework (with time invariant, time varying efficiencies or with inefficiency effects). Similarly to the previous empirical literature, one finds, in most cases, only a moderate consistency across the different approaches. In fact, the different spectrum of techniques imposed varied degrees of structure in the error term and indicated non-negligible discrepancies across the different measurement approaches in terms of the ranking structure, degree of persistence and best and worst practices patterns.

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Paper provided by European University Institute in its series Economics Working Papers with number ECO2006/15.

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Date of creation: 2006
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Handle: RePEc:eui:euiwps:eco2006/15
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  2. Zhu, Joe, 2001. "Super-efficiency and DEA sensitivity analysis," European Journal of Operational Research, Elsevier, vol. 129(2), pages 443-455, March.
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  7. Resende, Marcelo, 1999. "Productivity growth and regulation in U.S. local telephony," Information Economics and Policy, Elsevier, vol. 11(1), pages 23-44, March.
  8. Majumdar, Sumit K, 1997. "Incentive Regulation and Productive Efficiency in the U.S. Telecommunications Industry," The Journal of Business, University of Chicago Press, vol. 70(4), pages 547-76, October.
  9. Facanha, Luis Otavio & Resende, Marcelo, 2004. "Price cap regulation, incentives and quality:: The case of Brazilian telecommunications," International Journal of Production Economics, Elsevier, vol. 92(2), pages 133-144, November.
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  15. Resende, Marcelo, 2000. "Regulatory Regimes and Efficiency in US Local Telephony," Oxford Economic Papers, Oxford University Press, vol. 52(3), pages 447-70, July.
  16. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, June.
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  21. Tupper, Henrique Cesar & Resende, Marcelo, 2004. "Efficiency and regulatory issues in the Brazilian water and sewage sector: an empirical study," Utilities Policy, Elsevier, vol. 12(1), pages 29-40, March.
  22. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
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