We examine the impact of incentive regulation—price regulation and earnings sharing regulation—on retail service quality in the U.S. telecommunications industry between 1991 and 2002. We find that incentive regulation is associated with significantly higher service quality on several...

We examine the impact of state incentive regulation on network modernization, aggregate investment, revenue, cost, profit, and local service rates in the U.S. telecommunications industry between 1986 and 1999. We find evidence of greater network modernization under price cap regulation (PCR),...