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A Study of the Averch-Johnson Hypothesis in the Telecommunications Industry



The purpose of this study is to test the Averch-Johnson hypothesis in Bell Canada based on time-series data covering the 1952-76 period and using a variety of options, ranging from different specifications of the production function, the method of calculation the cost of capital, and the segmentation of the whole sample into shorter samples. Results confirm the presence of the A-J effect and illustrate the sensitivity of our method of investigation, particularly with the segmentation option.

Suggested Citation

  • Mirucki, Jean, 1980. "A Study of the Averch-Johnson Hypothesis in the Telecommunications Industry," MPRA Paper 27727, University Library of Munich, Germany, revised 1982.
  • Handle: RePEc:pra:mprapa:27727

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    More about this item


    Overcapitalisation; A-J Effect; Averch-Johnson Hypothesis; Cobb-Douglas Production Function; Cost of Capital;

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation


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