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Explaining the Choice Among Regulatory Plans in the U.S. Telecommunications Industry

  • Stephen G. Donald

    ()

  • David E.M. Sappington

We investigate why different states in the United States choose different regulatory plans in their telecommunications industry. We present a simple theoretical model and an empirical analysis of the issue. We find that a state is more likely to replace rate-of-return regulation with incentive regulation when: (1) residential basic local service rates have historically been relatively high; (2) allowed earnings under rate-of-return regulation in the state have been either particularly high or particularly low; (3) the state's leaders tend to come from both major political parties, rather than from a single party; (4) the state's urban population is growing relatively rapidly; and (5) the bypass activity of competitors in the state is less pronounced. Copyright 1995 by MIT Press.

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Paper provided by Boston University - Industry Studies Programme in its series Papers with number 0055.

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Date of creation: Feb 1995
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Handle: RePEc:fth:bostin:0055
Contact details of provider: Postal: Boston University, Industry Studies Program; Department of Economics, 270 Bay Road, Boston, Massachusetts 02215.
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Fax: 617-353-4449
Web page: http://www.bu.edu/econ/isp/
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