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Is Swiss Telecommunications a Natural Monopoly? An Evaluation of Empirical Evidence

Author

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  • Stefan Buehler

    () (Socioeconomic Institute, University of Zurich)

Abstract

Based upon time series data published by PTT prior to regulatory reform, this paper investigates whether Swiss telecommunications qualify as a natural monopoly. Employing the subadditivity concept for multiproduct industries, alternative specifications of quadratic cost functions are estimated. The results of these estimations are ambiguous and demonstrate the difficulty of empirically substantiating a natural monoply claim. It is argued that the natural monopoly concept is of limited usefulness for informing policy decisions.

Suggested Citation

  • Stefan Buehler, 2000. "Is Swiss Telecommunications a Natural Monopoly? An Evaluation of Empirical Evidence," SOI - Working Papers 0001, Socioeconomic Institute - University of Zurich.
  • Handle: RePEc:soz:wpaper:0001
    as

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    File URL: http://www.econ.uzh.ch/static/wp_soi/wp0001.pdf
    File Function: First version, 2000
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    References listed on IDEAS

    as
    1. 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 809-822, December.
    2. Blackman, Colin R, 1995. "Universal service: obligation or opportunity?," Telecommunications Policy, Elsevier, vol. 19(3), pages 171-176, April.
    3. James Bond, 1997. "Telecommunications is Dead, Long Live Networking : The Effect of the Information Revolution on the Telecom Industry," World Bank Other Operational Studies 11577, The World Bank.
    4. B├╝hler, Stefan, 1998. "Regulatory reform of telecommunications in Switzerland," Telecommunications Policy, Elsevier, vol. 22(8), pages 671-680, September.
    5. Braeutigam, Ronald R, 1979. "Optimal Pricing with Intermodal Competition," American Economic Review, American Economic Association, vol. 69(1), pages 38-49, March.
    6. Berg, Sanford V & Tschirhart, John, 1995. "A Market Test for Natural Monopoly in Local Exchange," Journal of Regulatory Economics, Springer, vol. 8(2), pages 103-124, September.
    7. 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 1037-1048, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Johan Willner, 2008. "Liberalisation, competition and ownership in the presence of vertical relations," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(5), pages 449-464, December.

    More about this item

    Keywords

    telecommunications; natural monopoly; time series;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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