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Potential Role of Economic Cost Models in the Regulation of Telecommunications in Developing Countries


  • Benitez, Daniel A.

    (Universidad Argntina de la Empresa)

  • Estache, Antonio

    (World Bank)

  • Kennet, D. Mark

    (Universidad Argntina de la Empresa)

  • Ruzzier, Christian A.

    (Universidad Argntina de la Empresa)


Worldwide privatization of the telecommunications industry and the introduction of competition in the sector, altogether with the ever-increasing rate of technological advance in telecommunications, raise new and critical challenges for regulation. For matters of pricing, universal service obligations, and the like, one of the key questions to be answered is: “What is the efficient cost of providing the service to a certain area or type of customer?” As developing countries move forward with their efforts to build up their capacity to regulate their privatized infrastructure monopolies, cost models are likely to prove increasingly important in answering this question. Costs models deliver a number of benefits to a regulator willing to apply them, but they also ask for something in advance: information. Without this vital element no answer can be given to the question posed above. In this paper, we will introduce cost models and establish their applicability when different degrees of information are available to the regulator. The latter is accomplished by running the model with different sets of actual data from Argentina’s second largest city and comparing the results. Reliable and detailed information is generally a scarce good in developing countries, and we establish here the minimum information requirements that a regulator needs to implement a cost proxy model approach, showing that this ‘data constraint’ need not be that binding.

Suggested Citation

  • Benitez, Daniel A. & Estache, Antonio & Kennet, D. Mark & Ruzzier, Christian A., 2000. "Potential Role of Economic Cost Models in the Regulation of Telecommunications in Developing Countries," UADE Working Papers 10_2000, Instituto de Economía, Universidad Argentina de la Empresa.
  • Handle: RePEc:ris:uadewp:2000_010

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    Cited by:

    1. Rossi, Martín, 2000. "Análisis de eficiencia aplicado a la regulación ¿Es importante la Distribución Elegida para el Término de Ineficiencia?," UADE Textos de Discusión 22_2000, Instituto de Economía, Universidad Argentina de la Empresa.
    2. Rossi, Martín, 2000. "Midiendo el valor social de la calidad de los servicios públicos: el agua," UADE Textos de Discusión 20_2000, Instituto de Economía, Universidad Argentina de la Empresa.
    3. Romero, Carlos, 2010. "Servicio Universal en el proceso de privatización de las empresas de telecomunicaciones y agua potable y alcantarillado en el Paraguay," UADE Textos de Discusión 34_2001, Instituto de Economía, Universidad Argentina de la Empresa.
    4. Ferro, Gustavo, 2001. "Participación del Sector Privado y Regulación en Agua y Saneamiento en Argentina: Casos Seleccionados," UADE Textos de Discusión 30_2001, Instituto de Economía, Universidad Argentina de la Empresa.
    5. Canay, Iván, 2002. "Eficiencia y Productividad en Distribuidoras Eléctricas: Repaso de la Metodología y Aplicación," UADE Textos de Discusión 35_2002, Instituto de Economía, Universidad Argentina de la Empresa.
    6. Greco, Esteban & Stanley, Leonardo, 2004. "Valuación de Activos, Tarifas e Incentivos: La base de capital en las empresas reguladas y la renegociación contractual," UADE Textos de Discusión 55_2004, Instituto de Economía, Universidad Argentina de la Empresa.
    7. Roitman, Mauricio & Ferro, Gustavo, 2003. "La concesión de Aguas Provinciales de Santa Fe," UADE Textos de Discusión 43_2003, Instituto de Economía, Universidad Argentina de la Empresa.

    More about this item


    Worldwide privatization; telecommunications industry; critical challenges for regulation;

    JEL classification:

    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General


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