The impact of price caps on the technical efficiency of local exchange carriers in the USA
by Noel D. Uri
International Journal of Technology, Policy and Management (IJTPM), Vol. 4, No. 2, 2004

Abstract: With the adoption of incentive regulation of local exchange carriers in the USA, the question has arisen whether it has had any demonstrable impact on technical efficiency. After providing an overview of the nature of incentive regulation, the data envelopment analysis methodology for measuring the effects of incentive regulation on technical efficiency is reviewed. This methodology allows for the measurement of both scale efficiency and technical efficiency of individual local exchange carriers. The results indicate that most local exchange carriers were technically efficient over the 1988–2001 period. Four local exchange carriers, however, consistently demonstrate scale inefficiency. Finally, in the aggregate, there is no identifiable improvement in local exchange carriers' technical efficiency between 1988 and 2001.

Online publication date: Wed, 07-Jul-2004

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