Designing Incentive Regulation for the Telecommunications Industry.DavidE. M. Sappington and Dennis L. Weisman.

Designing Incentive Regulation for the Telecommunications Industry.DavidE. M. Sappington and... 278 BOOK REVIEW and allows the Regional Bell Operating Companies (RBOCs) to enter the long distance market, firms seem more intent on merging and reselling services rather than building networks from scratch. After this background information on the industry, the next seven chapters focus on incentive regulation. Chapter 3 reviews existing regulatory plans. The more traditional plans include rate-of-return regulation, banded rate-of-return regulation with a range of authorized earnings, and rate case moratoriums. Incentive regu- lation plans consist of earnings-sharing, revenue-sharing, and price caps. When revenues are shared instead of earnings, a dollar reduction in costs would increase the firm’s actual final earnings by a dollar, rather than by some fraction. Thus, revenue-sharing plans can provide enhanced incentives to reduce costs. By control- ling prices along with a productivity offset, price cap plans also allow the firm to capture dollar for dollar any cost reduction. Periodic (rate-of-return style) reviews of price caps can reduce these incentives as productivity offsets are raised when earnings are deemed too high. The next chapter identifies regulatory goals in the telecommunications indus- try and points out that incentive regulation plans need to vary with desired goals (myth 1). Possibly conflicting goals such as universal Review of Industrial Organization Springer Journals

Designing Incentive Regulation for the Telecommunications Industry.DavidE. M. Sappington and Dennis L. Weisman.

Loading next page...
Kluwer Academic Publishers
Copyright © 1999 by Kluwer Academic Publishers
Economics; Industrial Organization; Microeconomics
Publisher site
See Article on Publisher Site

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.

DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

Monthly Plan

  • Read unlimited articles
  • Personalized recommendations
  • No expiration
  • Print 20 pages per month
  • 20% off on PDF purchases
  • Organize your research
  • Get updates on your journals and topic searches


Start Free Trial

14-day Free Trial

Best Deal — 39% off

Annual Plan

  • All the features of the Professional Plan, but for 39% off!
  • Billed annually
  • No expiration
  • For the normal price of 10 articles elsewhere, you get one full year of unlimited access to articles.



billed annually
Start Free Trial

14-day Free Trial