Competition in Payphones: State Regulations and Independent Providers' Shares

Independent payphone providers in 1995 held a 17.4 percent national share of payphones. Their shares and state regulators' policies vary greatly by state. We test the determinants of IPPs' shares in 1996, finding that they increase with the allowed local-call rate, with "dial-round compensation," and with the degree to which regulators have removed LEC competitors' incentives to carry inflated payphone investments. Weak evidence suggests that regulation of intrastate long-distance rates may help to solve the IPP's problem of committing not to overcharge. Under the Telecommunications Act of 1996, states' policy differences and interstate differences in IPPs' shares will likely narrow.     

Modelling alternative residential peak-load electricity rate structures

We specify a model of consumer behavior that permits the simultaneous estimation of effects of time-of-use rates having a demand charge, differential energy charges, and any combination of such charges. The model employs a flexible functional form and thus does not impose restrictions on substitution possibilities among types of usage. We estimate the model using data from the Wisconsin Residential Electricity Pricing Experiment for eight system peak days. The most surprising finding of our empirical application is that the two types of time-of-use rates employed in the Wisconsin experiment have similar effects on patterns of household electricity usage.     

Modeling the welfare effects of net neutrality regulation: A Comment on Economides and Tåg

In a recent article in Information Economics and Policy Economides and Tåg (2012), analyze a theoretical model of two-sided markets designed to assess the welfare effects of net neutrality. According to the model, the only unambiguous beneficiaries of net neutrality regulation are content providers. Consumers are unambiguously worse off under net neutrality, while the effect on platform operators is ambiguous. In the aggregate, net neutrality may be either surplus-enhancing or surplus-reducing, because the gains to content providers (and possibly platform operators) may or may not outweigh the losses to consumers (and possibly platform operators), depending on whether certain parameter restrictions are satisfied. However, these restrictions are difficult to interpret, given that the structural parameters lack real-world analogs. In this Comment, I demonstrate that the assumptions underlying the authors’ surplus-enhancing result imply a straightforward and testable hypothesis. Specifically, I show that the ratio of aggregate content provider profits to aggregate platform operator profits must be strictly less than 0.4 under net neutrality for the surplus-enhancing result to hold. For many parameter values, the upper bound to the profit ratio is significantly lower. Finally, I provide a brief empirical assessment of the relative profitability of content providers and ISPs. The balance of the empirical evidence reviewed provides little basis for assuming that the relative profitability constraint implied by the model is satisfied in practice.     

Identifying mobility barriers

This paper uses a new (PIMS) research data base to identify the mobility barriers–the factors associated with sustained intraindustry profit differentials–in a cross-section of industries. The exercise suggests that differentiation-related factors play more of a role in generating intraindustry profit differentials than do cost-related ones. It also indicates that differentiation-related advantages tend to be absorbed into fatter margins and (in some instances) larger maket shares, while cost-related advantages are taken primarily in the form of increases in market share.     

Towards the optimisation of the schedule reliability of aircraft rotations

A cost minimisation model is developed to optimise the scheduling of aircraft rotation by balancing the use of schedule time, which is designed to control flight punctuality, and delay costs. A case study is conducted using schedule and punctuality data from a European airline. Optimisation shows that the operational performance of an aircraft rotation schedule is improved in terms of: schedule regularity, mean delays and expected delays of aircraft rotation. Although the total schedule time of the study rotation is increased by 5%, a system cost saving of some $9.3 million/1000 aircraft rotations is gained after schedule optimisation. Three schedule reliability surrogates—mean delay time of aircraft rotation, expected delay time of aircraft rotation and schedule regularity—are employed to evaluate the reliability of aircraft rotation schedules. It is found that the reliability and robustness of schedule implementation is significantly improved after optimisation.