Regulatory regimes and efficiency in U. S. local telephony

Abstract

The paper aims at assessing the efficiency consequences of different regulatory regimes for U.S. local telephony. Specifically one contrasts alternative regulatory regimes (price-cap regulation and incentive regulation) with traditional rate-of-return regulation. Relative efficiency scores are obtained from the Data Envelopment Analysis (DEA) approach. The regression analysis on the determinants of efficiency indicates, after controlling for technical change effects, that alternative forms of regulation appear to induce a higher level of efficiency for the regulated firms.