The Political Economy of Price Cap Regulation
The last decade has witnessed a dramatic substitution of price cap regulation for rate-ofreturn regulation in the telecommunications industry. The 1996 Telecommunications Act empowers state regulators to set the terms of competitive entry in local telephone markets. We investigate whether the form o...
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| Veröffentlicht in: | Review of industrial organization 2000-06, Vol.16 (4), p.343-356 |
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| container_title | Review of industrial organization |
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| creator | LEHMAN, DALE E. WEISMAN, DENNIS L. |
| description | The last decade has witnessed a dramatic substitution of price cap regulation for rate-ofreturn regulation in the telecommunications industry. The 1996 Telecommunications Act empowers state regulators to set the terms of competitive entry in local telephone markets. We investigate whether the form of regulation endogenously affects the regulator's behavior with respect to competitive entry. The evidence reveals that regulators in price cap jurisdictions tend to set more liberal terms of entry in comparison with regulators in rate-of-return jurisdictions. This suggests that price cap regulation suffers from incomplete contracting, undermining the potentially superior incentive properties of this important regulatory reform. |
| doi_str_mv | 10.1023/A:1007845023817 |
| format | Article |
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| ispartof | Review of industrial organization, 2000-06, Vol.16 (4), p.343-356 |
| issn | 0889-938X 1573-7160 |
| language | eng |
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| source | Jstor Complete Legacy; PAIS Index; SpringerLink Journals - AutoHoldings; EBSCOhost Business Source Complete |
| subjects | Commercial regulation Communications networks Competition Costs Economic competition Economic costs Economics Empowerment Incumbents Industrial regulation Insurance regulation Market entry Market prices Political economy Price regulation Price regulations Prices Rates of return Reform Regulation Regulatory reform Resale Studies Subsidies Telecommunications Telecommunications Act 1996-US Telephone companies |
| title | The Political Economy of Price Cap Regulation |
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