The Impact of Alternative Forms of State Regulation of AT&T on Direct-Dial, Long-Distance Telephone Rates
Federal and state regulatory agencies have traditionally used rate-of-return regulation to set profit and rate levels for utilities. A "price cap" framework, in which the regulatory agency sets a maximum rate below which the regulated utility has pricing flexibility, is possibly a more efficient alternative to rate-of-return regulation. This article presents an econometric analysis that compares AT&T's prices of intrastate, long-distance telephone service in states that allow AT&T pricing flexibility with those in states that do not. The results of this analysis suggest that AT&T's daytime, evening, nighttime, and weekend rates are significantly lower in states that allow pricing flexibility than in states that use rate-of-return regulation.
Year of publication: |
1989
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Authors: | Mathios, Alan D. ; Rogers, Robert P. |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 20.1989, 3, p. 437-453
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Publisher: |
The RAND Corporation |
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