The cost structure of Australian telecommunications
Since 1991 Australian telecommunications has undergone substantial reform. To a large extent, the economic correctness of pro-competitive policy depends on the non-existence of natural monopoly technology. This paper provides estimates of the Australian telecommunications system cost structure, and tests for subadditivity from 1943 to 1991. Additivity of the cost function after 1945 rejects the natural monopoly hypothesis and supports recent government policy. Diminished natural monopoly characteristics suggest that co-ordination between firms through networking can achieve similar economies as internal co-ordination within a monopoly. This finding is important, given the trend towards network unbundling, and service provision through interconnection.
|Date of creation:||2001|
|Date of revision:|
|Publication status:||Published in The Economic Record 239.77(2001): pp. 338-350|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- W. Erwin Diewert & T.J. Wales, 1989.
"Flexible Functional Forms and Global Curvature Conditions,"
NBER Technical Working Papers
0040, National Bureau of Economic Research, Inc.
- Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
- Foreman, R Dean & Beauvais, Edward, 1999. "Scale Economies in Cellular Telephony: Size Matters," Journal of Regulatory Economics, Springer, vol. 16(3), pages 297-306, November.
- Suits, Daniel B & Mason, Andrew & Chan, Louis, 1978. "Spline Functions Fitted by Standard Regression Methods," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 132-39, February.
- Kjell G. Salvanes & Sigve Tjøtta, 1998. "A Test for Natural Monopoly with Application to Norwegian Electricity Distribution," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(6), pages 669-685, December.
- Bernstein, Jeffrey I., 1988. "Multiple outputs, adjustment costs and the structure of production for Bell Canada," International Journal of Forecasting, Elsevier, vol. 4(2), pages 207-219.
- Richard T. Shin & John S. Ying, 1992. "Unnatural Monopolies in Local Telephone," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 171-183, Summer.
- Geoffrey Heenan, 1989. "Regulation Of The Australian Telecommunications Industry," Economic Papers, The Economic Society of Australia, vol. 8(4), pages 65-73, December.
- McKenzie, David J & Small, John P, 1997. "Econometric Cost Structure Estimates for Cellular Telephony in the United States," Journal of Regulatory Economics, Springer, vol. 12(2), pages 147-57, September.
- Bernstein, Jeffrey I, 1989.
"An Examination of the Equilibrium Specification and Structure of Production for Canadian Telecommunications,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 4(3), pages 265-82, July-Sept.
- Bernstein, Jeffrey I., 1987. "An Examination of the Equilibrium Specification and Structure of Production for Canadian Telecommunications," Working Papers 87-21, C.V. Starr Center for Applied Economics, New York University.
- Lopez, Elena, 1997. "The Structure of Production of the Spanish Telecommunications Sector," Empirical Economics, Springer, vol. 22(3), pages 321-30.
- Baumol, William J & Braunstein, Yale M, 1977. "Empirical Study of Scale Economies and Production Complementarity: The Case of Journal Publication," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 1037-48, October.
- King, Stephen P, 1997. "National Competition Policy," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 270-84, September.
- Diewert, W E & Wales, T J, 1992. "Quadratic Spline Models for Producer's Supply and Demand Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 705-22, August.
- Baumol, William J, 1977. "On the Proper Cost Tests for Natural Monopoly in a Multiproduct Industry," American Economic Review, American Economic Association, vol. 67(5), pages 809-22, December.
- Pulley, Lawrence B & Braunstein, Yale M, 1992. "A Composite Cost Function for Multiproduct Firms with an Application to Economies of Scope in Banking," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 221-30, May.
- Roller, Lars-Hendrik, 1990. "Proper Quadratic Cost Functions with an Application to the Bell System," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 202-10, May.
- Evans, David S & Heckman, James J, 1984. "A Test for Subadditivity of the Cost Function with an Application to the Bell System," American Economic Review, American Economic Association, vol. 74(4), pages 615-23, September.
- Greenwald, Bruce C & Sharkey, William W, 1989. "The Economics of Deregulation of Local Exchange Telecommunications," Journal of Regulatory Economics, Springer, vol. 1(4), pages 319-39, December.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:11019. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.