The determinants of market share for the `dominant firm' in telecommunications

The present study examines the factors affecting the market share of the dominant firm in long-distance telecommunications, AT&T. A theoretical model is specified which includes competing long-distance rates (e.g., those of MCI and U.S. Sprint), price-cap regulation and advertising expenditures as determinants of the dominant firm's market share. Using intercity long-distance carrier charges for 1984–1994, this study points out the importance of AT&T's own rate structure, those of its major competitors, and government regulations in determining AT&T's market share over time.     

An assessment of telecommunications reform in developing countries

This paper analyzes the impact of policy reform in basic telecommunications on sectoral performance using a new panel data set for 86 developing countries across Africa, Asia, the Middle East, Latin America and the Caribbean over the period 1985 to 1999. We address three questions. First, what impact do specific policy changes—relating to ownership and competition—have on sectoral performance? Second, how is the impact of change in any one policy affected by the implementation of the other, and by the overall regulatory framework? Third, does the sequence in which reforms are implemented affect performance? We find that both privatization and competition lead to significant improvements in performance. But a comprehensive reform program, involving both policies and the support of an independent regulator, produced the largest gains: an 8 percent higher level of mainlines and a 21 percent higher level of labor productivity compared to years of partial and no reform. Interestingly, the sequence of reform matters: mainline penetration is lower if competition is introduced after privatization, rather than at the same time.     

X-Factor updating and total factor productivity growth: the case of peruvian telecommunications, 1996–2003

This paper measures TFP growth of Telefonica del Peru, and based on this growth rate computes a telecommunications X-factor or offset. More broadly the paper analyses the problem of updating an X-factor under existing price cap regulation. A revised offset must account for the possible restructuring of service offerings resulting from improved efficiencies in response to price cap incentives. Our updating framework focuses on efficiency criteria, and based on economic principles emphasizes the continuity between prior and continuing standards. In the case of Peru, based on annual average TFP growth of 1.66%, the X-factor is computed to be 4.06% per year. An erratum to this article can be found at     

Institutional arrangements and price rebalancing: empirical evidence from the United States and Europe

This paper explores the rebalancing of prices for voice service in the United States (US) and the European Union (EU) from conceptual and empirical perspectives. We determine the overall cost and structure of a standardized basket of residential and business services. Our data indicate that during the 1994–2000 period the degree of rate rebalancing was significantly higher in the EU than in the US. While the developments at the level of EU Member States are more heterogeneous and the process of rate rebalancing is not completed, these findings correspond to the predictions derived from our comparative institutional analysis.     

Asymmetric access price regulation in telecommunications markets

In liberalized telecommunications markets, the incumbent typically enjoys several advantages over any entrant. Regulation in such asymmetric markets stimulates competition in the short and the long term if retail prices are low and the entrant's profits are high so that entry is encouraged. I show that asymmetric access price regulation with a cost-based access price for the incumbent and an access markup for the entrant is more successful than cost-based access price regulation applied to incumbent and entrant. This is a robust prediction with respect to the pricing strategies considered. Such asymmetric access price regulation is in accordance with European legislation.     

Efficiency versus social optimality: The case of telecommunications pricing

Standard arguments for efficiency-based pricing policies break down once it is admitted that no lump-sum transfers and taxes are available. In this paper, it is argued that the appropriate solution is to equate the marginal welfare cost of redistributing income through pricing policies that deviate from marginal cost with the marginal cost of redistribution through the tax and welfare systems. For telecommunications pricing, this solution may be implemented by charging usage prices for long-distance services in excess of marginal cost and making corresponding reductions in fixed access charges. An illustrative example, based on data for Australia, is presented.     

An econometric analysis of the effects of market liberalization on price dynamics and price volatility

The paper investigates price dynamics under market liberalization, with a focus on the effects of lowering price floors. We analyze price dynamics by specifying and estimating a dynamic Tobit model under time-varying volatility, where the market price is censored by a government-set support price. The model is applied to the U.S. butter market over the last three decades. The econometric results show how the price support program affects both expected prices and the volatility of prices. It is found that the censoring effects of a price support program can be significant and large even if the price support is set relatively low.

The network of networks: Localized technological change in telecommunications and productivity growth

Radical innovations in the usage of telecommunication services have drastically changed the role of telecommunications in the economy. Today the usage of telecommunications services is associated with the opportunity to extract significant quasi-rents. An empirical analysis of the Italian case in the mid-eighties confirms the significant difference between telecommunications cost share and marginal productivity levels. The opportunity to reap transient quasi-rents has in turn pushed users to innovate so as to become major players in the arena of technological change in telecommunications and information technologies. In this context the notion of network of networks, implemented in the European Union, seems most appropriate to push the dynamic efficiency of the system and accommodate both centrifugal and centripetal innovations, yet also to retain network interoperability and interconnectivity.     

The effects of incentive regulation in the telecommunications industry: A survey

We review recent empirical studies of the performance of incentive regulation in the telecommunications industry. These studies provide evidence that productivity, infrastructure investment, profit levels, telephone penetration, and new service offerings have increased under incentive regulation. Service rates have generally remained stable or decreased slightly, and service quality does not appear to have been affected adversely. There is no evidence that incentive regulation has led to streamlined regulatory proceedings. Strong evidence that incentive regulation has reduced the costs of providing telephone service has not yet materialized.We thank Sanford Berg, Alex Larson, Larry Schelhorse, and Timothy Tardiff for very helpful comments and discussion. We are also grateful to Michael Crew and Ingo Vogelsang for a particularly careful and insightful review of this paper.     

Of Carts and Horses: Regulation and Privatization in Telecommunications Reforms

In the early 1990s, many advocated quick privatization of state‐owned monopolies in developing countries, assuming that market institutions would develop once firms were privately owned. More recent thinking emphasizes establishing institutions conducive to promoting competition before privatization. To date little empirical work has informed the debate. This paper addresses this gap by testing whether establishing a regulatory authority prior to privatizing incumbent telecommunications firms matters. I find that countries that established regulatory authorities prior to privatization saw increased telecom investment and telephone penetration compared to countries that did not. Moreover, investors paid more for telecom firms in countries that established a regulator prior to privatization.     

The Telecommunications Act at three years: an economic evaluation of its implementation by the Federal Communications Commission

The competitive free-for-all that Congress envisioned in the 1996 Telecommunications Act has for the most part not appeared. The Act calls for two forms of regulatorily-assisted entry into local markets: lease of network elements and resale. The FCC has decreed that the charges for those elements and the resale discounts must emulate the costs of an ideally-efficient firm. This standard is in fact not efficient, and the FCC’s attempt to jump-start the entry of competitors in this way has short-circuited the competitive process itself and jeopardized achievement of the goals of the Act.     

基于价格上限的输配电价格管制模型改进研究

由于输配电环节具有自然垄断特性,因此必须接受监管,但随着电力的市场化改革,旧有的监管机制存在一定缺陷,而基于绩效的价格管制模型又不能直接适用于我国的国情。本文提出了一种基于价格上限的价格管制改进模型,在一般价格上限模型中引入电能质量因子,从而很好地克服了该模型导致质量恶化的缺陷,提高了模型的适用性。文中还详细介绍了电能质量因子的确定问题,并对该质量因子进行了算例分析。     

Geographic price dispersion in retail markets: Evidence from micro-data

Using an extensive micro-price data of 266 retail goods and services across US, EU and OECD cities between 1990 and 2005, we study characteristics of geographic dispersion of deviations from the Law of One Price. We find that the magnitude of price dispersion is a function of the characteristics of both the type of good and set of locations under examination. Higher share of non-traded inputs and lower tradability of goods are both found to contribute to geographic price dispersion, with the former typically dominating in explanatory power. The role of tradability of good in accounting for the price dispersion is more significant as we move beyond an economic geography, while non-traded input level matters relatively more if we move to the interior of this geography. Our evidence suggests that the models of real exchange rates should incorporate the classical distinction between traded inputs and local inputs as well as a role for relative markups and traditional trade costs.     

我国自然垄断行业的价格研究

自然垄断行业是一个特殊的行业,我国自然垄断行业的产品和服务价格明显偏高,效率低下,政府必须对其价格进行规制。然而,常用的价格规制方法也有一定的局限性。自然垄断行业的价格管理改革,需要通过市场机制、竞争机制以及政府有效的规制共同对其价格发挥作用。     

The empirical study on price discovery of cornstarch futures market in China

This article aims at exploring the performance of the price discovery function of cornstarch futures market in China. In order to test the stationarity of the cash and futures prices of cornstarch, the augmented Dickey–Fuller test is applied. Both prices are integrated of order one. Then, the Johansen cointegration test is conducted to test the cointegrating relationship between those two prices. Finally, the Granger causality test is performed to observe the direction of causality. The evidence shows that there is a long-run relationship between cash and futures prices and the futures price Granger causes cash price. As a whole, price discovery of cornstarch market in China is present although it is a newly emerged market.     

Introducing the mini-futures contract on Ibex 35: implications for price discovery and volatility transmission

This paper analyzes the effects of the introduction of the mini-futures contract in the Spanish stock index futures market. The objective of the paper is twofold: (a) to analyze the potential destabilizing effect of the mini futures trading activity on the distribution of spot returns, and (b) to test whether the mini futures contract significantly contributes to the price discovery process. A non-parametric approach is used to estimate the density function of spot return conditional to both spot and futures trading volume. Empirical findings using 15-min intraday data reveal that the mini futures trading activity enhances the price discovery function of the derivative market and does not destabilize spot prices. A preliminary version of this paper has been previously published as a working paper of the Instituto Valenciano de Investigaciones Económicas, WP-EC 2004-13. M. Illueca and Juan A. Lafuente acknowledge financial support from Spanish ministry of Science and Technology through grants SEJ-2005-02776, and both SEJ2006-14354 and BEC-2003-03965, respectively.     

旅行社价格战的博弈分析

旅行社是旅游产品设计、组织和销售的渠道商以及消费者之间的桥梁.旅行社对旅游业具有重要影响，旅行社之间的价格竞争日益严重，盈利率低。随着我国加入世贸组织，越来越多的外国旅行社进入我国、针对我国旅行社如何走出困境，本文从博弈角度分析旅行社的价格竞争及其对策。     

Regulatory effects on the market penetration and capacity of reliability differentiated service

This paper investigates the effects of alternative forms of regulation on the market penetration and capacity that are determined by a profit-maximizing monopolist providing reliability differentiated service to consumers. Both price cap and rate of return regulation lead to larger capacity and market penetration than in the absence of regulation. These forms of regulation also lead to larger consumer surplus than in the absence of regulation. A minimum reliability standard reduces market penetration, and this reduction may lead to a decrease in consumer surplus.      

The new long-term trend in the price of natural gas

A significant negative trend in the long-term price of natural gas at the wellhead is revealed from simulations with a partial equilibrium model of the industry in the United States. The model framework consists of a simultaneous equations system for production from reserves and for demands for production in the residential, commercial and industrial sectors. We utilize a wide range of historical data to calibrate the model and then develop two sets of scenarios for future prices, one based on further industry development under current regulation, and the other based on deregulation and development of an open market for gas services. The key variables — price of natural gas, level of production and inground gas reserves — for the next 10 years improve for the consumer whether or not there is deregulation but the second scenario leaves the consumer better off sooner.