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.