A Note on the Technical and Allocative Efficiency of Local Exchange Carriers in the United States

A Note on the Technical and Allocative Efficiency of Local Exchange Carriers in the United States The issue explored is whether incentive regulation of local exchange carriers in the United States has resulted in an increase in efficiency. After providing an overview of the nature of incentive regulation, the methodology for measuring the effects of incentive regulation on efficiency is reviewed. This methodology is data envelopment analysis and allows for the measurement of both technical efficiency and allocative efficiency of individual local exchange carriers. The results of empirically implementing the DEA approach indicate that there is little change in technical efficiency. In fact average technical efficiency in 1988 was the same as in 2001. Next, while outputs continued to grow at about their historical rate across LECs, the sizeable increase in the two types of capital increased inputs well above their historical average rates for some LECs leading to short run allocative inefficiency. On average, however, allocative efficiency shows no identifiable trend between 1988 and 2001. Finally, in the aggregate, total economic efficiency does not demonstrate any trend between 1988 and 2001. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

A Note on the Technical and Allocative Efficiency of Local Exchange Carriers in the United States

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Kluwer Academic Publishers
Copyright © 2006 by Springer
Social Sciences; Methodology of the Social Sciences; Social Sciences, general
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