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David E M Sappington - One of the best experts on this subject based on the ideXlab platform.
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Reviewing the impact of Incentive Regulation on U.S. telephone service quality
Utilities Policy, 2005Co-Authors: David E M SappingtonAbstract:Abstract This article reviews recent evidence regarding the effects of Incentive Regulation on retail service quality in the U.S. telecommunications industry. The evidence reveals neither a systematic increase nor a systematic decrease in service quality under Incentive Regulation. Service quality has increased significantly on some dimensions (e.g., fewer initial trouble reports), but has declined significantly on other dimensions (e.g., fewer installation commitments met).
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Incentive Regulation and telecommunications service quality
Journal of Regulatory Economics, 2004Co-Authors: A I Chunrong, Salvador Martinez, David E M SappingtonAbstract:We examine the impact of Incentive Regulation—price Regulation and earnings sharing Regulation—on retail service quality in the U.S. telecommunications industry between 1991 and 2002. We find that Incentive Regulation is associated with significantly higher service quality on several dimensions (e.g., more rapid installation of new telephone service, fewer trouble reports, and increased customer satisfaction) but significantly lower quality on some dimensions (fewer installation commitments met and longer delays in resolving reported service problems)
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Incentive Regulation and Telecommunications Service Quality
Journal of Regulatory Economics, 2004Co-Authors: Salvador Martinez, David E M SappingtonAbstract:We examine the impact of Incentive Regulation—price Regulation and earnings sharing Regulation—on retail service quality in the U.S. telecommunications industry between 1991 and 2002. We find that Incentive Regulation is associated with significantly higher service quality on several dimensions (e.g., more rapid installation of new telephone service, fewer trouble reports, and increased customer satisfaction) but significantly lower quality on some dimensions (fewer installation commitments met and longer delays in resolving reported service problems)
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the effects of Incentive Regulation on retail telephone service quality in the united states
Review of Network Economics, 2003Co-Authors: David E M SappingtonAbstract:This article provides a review and critique of the empirical literature that examines the effects of Incentive Regulation on retail telephone service quality in the United States. The literature provides mixed findings. Some dimensions of service quality appear to improve under Incentive Regulation (relative to rate of return Regulation) while others deteriorate. Suggestions for much-needed future research are offered.
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the impact of state Incentive Regulation on the u s telecommunications industry
Journal of Regulatory Economics, 2002Co-Authors: Chunrong Ai, David E M SappingtonAbstract:We examine the impact of state Incentive Regulation on network modernization, aggregate investment, revenue, cost, profit, and local service rates in the U.S. telecommunications industry between 1986 and 1999. We find evidence of greater network modernization under price cap Regulation (PCR), earnings sharing Regulation (ESR), and rate case moratoria (RCM) than under rate of return Regulation (RORR). Costs are generally lower under RCM. Costs are also lower under ESR and PCR when local competition is sufficiently intense. Some local service rates for business customers are lower under PCR. Revenue, profit, aggregate investment, and residential local service rates do not vary systematically under Incentive Regulation relative to RORR.
Noel D. Uri - One of the best experts on this subject based on the ideXlab platform.
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Measuring the impact of Incentive Regulation on technical efficiency in telecommunications in the United States
Applied Mathematical Modelling, 2004Co-Authors: Noel D. UriAbstract:Abstract The question addressed is whether the adoption of Incentive Regulation, which has become an important regulatory tool in the telecommunications industry in the United States, has resulted in a change in the technical efficiency of local exchange carriers in the United States. After providing an overview of the nature of Incentive Regulation, a methodology for measuring technical efficiency and its change is introduced. This is a multiple-output/multiple-input distance function approach to measuring technical efficiency. The results of implementing this approach for 19 local exchange carriers for the 1988–2001 period indicate that in the production of local service, intrastate toll/access service, and interstate access to local loops, there was no change in technical efficiency between the 1988–1990 period and the 1991–2001 period, something that Incentive Regulation was specifically designed to promote.
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The Effect of Incentive Regulation in Telecommunications in the United States
Quality and Quantity, 2003Co-Authors: Noel D. UriAbstract:Incentive Regulation is now an important regulatory tool in the telecommunications industry in the United States. The issue explored here is whether Incentive Regulation has resulted in an increase in productive efficiency. After providing an overview of the nature of Incentive Regulation, one methodology for measuring the effects of Incentive Regulation on productive efficiency is reviewed. This methodology is data envelopment analysis (DEA) and 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 1988–1998 period. Four LECs, however, consistently demonstrate scale inefficiency. In the aggregate, however, based on the DEA results there was no identifiable improvement in aggregate LECs' technical efficiency between 1988 and 1998. Subsequently, an alternative methodology, a stochastic frontier production function approach, is considered. The results from this methodology confirm that there was no change in technical efficiency over the period of study, something that Incentive Regulation was specifically designed to enhance.
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Technical efficiency in telecommunications in the United States and the impact of Incentive Regulation
Applied Mathematical Modelling, 2003Co-Authors: Noel D. UriAbstract:Abstract Incentive Regulation has become an important regulatory tool in the telecommunications industry in the United States. The issue explored here is whether Incentive Regulation has resulted in an increase in technical efficiency. After providing an overview of the nature of Incentive Regulation, a methodology for measuring technical efficiency and its change is introduced. This is a multiple-output/multiple-input distance function approach to measuring technical efficiency. The results of implementing this approach for 19 local exchange carriers for the 1988–1999 period indicate that in the production of local service, intrastate toll/access service, and interstate access to local loops, there was no change in technical efficiency between the 1988–1990 period and the 1991–1999 period, something that Incentive Regulation was specifically designed to promote.
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The adoption of Incentive Regulation and its effect on technical efficiency in telecommunications in the United States
International Journal of Production Economics, 2003Co-Authors: Noel D. UriAbstract:Abstract Incentive Regulation has become an important regulatory tool in the telecommunications industry in the United States. The issue explored here is whether Incentive Regulation has resulted in an increase in efficiency. After providing an overview of the nature of Incentive Regulation, a methodology for measuring technical efficiency and its change is introduced. This is a multiple-output/multiple-input distance function approach to measuring technical efficiency. The results of implementing this approach for 19 local exchange carriers for the 1988–1999 period indicate that in the production of local service, intrastate toll/access service, and interstate access to local loops, there was no change in technical efficiency between the 1988–1990 period and the 1991–1999 period, something that Incentive Regulation was specifically designed to promote.
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The effect of Incentive Regulation in telecommunications in the USA
International Journal of Services Technology and Management, 2002Co-Authors: Noel D. UriAbstract:Incentive Regulation is now an important regulatory tool in the telecommunications industry in the USA. The issue explored here is whether Incentive Regulation has resulted in an increase in productive efficiency. After providing an overview of the nature of Incentive Regulation, one methodology for measuring its effects on productive efficiency is reviewed. This methodology is data envelopment analysis (DEA) and 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 1988-1998 period. Four LECs, however, consistently demonstrate scale inefficiency. In the aggregate, however, based on the DEA results there was no identifiable improvement in aggregate LECs' technical efficiency between 1988 and 1998. Subsequently, an alternative methodology, a stochastic frontier production function approach, is considered. The results from this methodology confirm that there was no change in technical efficiency over the period of study, something that Incentive Regulation was specifically designed to enhance.
Paul L. Joskow - One of the best experts on this subject based on the ideXlab platform.
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Incentive Regulation in theory and practice electricity distribution and transmission networks
NBER Chapters, 2014Co-Authors: Paul L. JoskowAbstract:Modern theoretical principles to govern the design of Incentive Regulation mechanisms are reviewed and discussed. General issues associated with applying these principles in practice are identified. Examples of the actual application of Incentive r egulation mechanisms to the Regulation of prices and service quality for “unbundled” transmission and distribution networks are presented and discussed. Evidence regarding the performance of Incentive Regulation in practice for electric distribution and transmission networks is reviewed. Issues for future research are identified.(This abstract was borrowed from another version of this item.)
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Incentive Regulation and Its Application to Electricity Networks
Review of Network Economics, 2008Co-Authors: Paul L. JoskowAbstract:This paper examines developments since the publication of The Economics of Regulation in the theory of Incentive Regulation and its application to the Regulation of unbundled electricity transmission and distribution networks. Conceptual mechanism design issues that arise when regulators are imperfectly informed and there is asymmetric information about costs, managerial effort, and quality of service are discussed. The design and application of price cap mechanisms and related quality of service Incentives in the UK are explained. The limited literature that measures the effects of Incentive Regulation applied to electricity networks is reviewed.
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Incentive Regulation and Its Application to Electricity Networks
Review of Network Economics, 2008Co-Authors: Paul L. JoskowAbstract:This paper examines developments since the publication of The Economics of Regulation in the theory of Incentive Regulation and its application to the Regulation of unbundled electricity transmission and distribution networks. Conceptual mechanism design issues that arise when regulators are imperfectly informed and there is asymmetric information about costs, managerial effort, and quality of service are discussed. The design and application of price cap mechanisms and related quality of service Incentives in the UK are explained. The limited literature that measures the effects of Incentive Regulation applied to electricity networks is reviewed.
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Incentive Regulation in theory and practice electricity distribution and transmission networks
2005Co-Authors: Paul L. JoskowAbstract:Over the last twenty years several network industries that evolved historically as either private or state-owned regulated vertically integrated monopolies have been privatized, restructured, and some vertical segments deregulated. These industries include telecommunications, natural gas, electric power, and railroads. The reform program typically involves the vertical separation (ownership or functional) of potentially competitive segments, which are gradually deregulated, from remaining vertical segments that are assumed to have natural monopoly characteristics and continue to be subject to price, network access, service quality and entry Regulations. In several countries, an important part of the reform agenda has included the introduction of “Incentive Regulation” mechanisms for the remaining regulated segments as an alternative to traditional “cost of service” or “rate of return” Regulation. The expectation was that Incentive Regulation mechanisms would provide more powerful Incentives for regulated firms to reduce costs, improve service quality in a cost effective way, stimulate (or at least not impede) the introduction of new products and services, and stimulate efficient investment in and pricing of access to regulated infrastructure services.
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Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks
SSRN Electronic Journal, 2005Co-Authors: Paul L. JoskowAbstract:Modern theoretical principles to govern the design of Incentive Regulation mechanisms are reviewed and discussed. General issues associated with applying these principles in practice are identified. Examples of the actual application of Incentive Regulation mechanisms to the Regulation of prices and service quality for “unbundled” transmission and distribution networks are presented and discussed. Evidence regarding the performance of Incentive Regulation in practice for electric distribution and transmission networks is reviewed. Issues for future research are identified.
Aniruddha Banerjee - One of the best experts on this subject based on the ideXlab platform.
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does Incentive Regulation cause degradation of retail telephone service quality
Information Economics and Policy, 2003Co-Authors: Aniruddha BanerjeeAbstract:Abstract Most states in the US have now adopted some variant of Incentive Regulation for their incumbent local exchange carriers (ILECs), the most common being price cap Regulation which constrains annual movements in the prices of intrastate telephone services considered to be non-competitive. Some states have also adopted retail service quality provisions to ensure that ILECs subject to Incentive Regulation do not pursue cost savings and productivity gains at the expense of service quality. With the impending renewal and revision of Incentive Regulation plans in several states, there is now an urgent need to understand the nexus between Incentive Regulation and retail service quality performance. Expanding on past studies of this issue, this paper uses panel data on 49 local exchange carriers for the period 1991–1999 to test for Granger causality from Incentive Regulation plans to retail service quality performance. Using 12 measures of retail telephone service quality, the primary finding is that average performance has not worsened, and has even improved, as states have moved progressively from rate-of-return Regulation for ILECs to various forms of Incentive Regulation.
Dennis L Weisman - One of the best experts on this subject based on the ideXlab platform.
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the effects of Incentive Regulation in the telecommunications industry a survey
Journal of Regulatory Economics, 1996Co-Authors: Donald J Kridel, David E M Sappington, Dennis L WeismanAbstract:We review recent empirical studies of the performance of Incentive Regulation in the telecommunications industry. These studies provide evidence that productivity, infrastructure investment, profit levels, telephone penetration, and new service offerings have increased under Incentive Regulation. Service rates have generally remained stable or decreased slightly, and service quality does not appear to have been affected adversely. There is no evidence that Incentive Regulation has led to streamlined regulatory proceedings. Strong evidence that Incentive Regulation has reduced the costs of providing telephone service has not yet materialized.
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designing Incentive Regulation for the telecommunications industry
1996Co-Authors: Thomas P Lyon, David E M Sappington, Dennis L WeismanAbstract:Incentive Regulation has become widespread in telecommunications. By assessing the strengths and weaknesses of plans that are currently in place, this study uncovers the central principles that underlie sound and effective Incentive Regulation. Under conditions of rapid change and great uncertainty, Incentive Regulation, which encourages a company toward goals but allows it some discretion in reaching those goals, should work better than rate of return Regulation, which estimates a company's costs and then limits the amount of return the firm can earn. Given the uncertainty that exists in telecommunications today about consumer demand and the nature of production technology, it is no surprise that regulatory commissions have recently implemented a variety of Incentive Regulations. Sappington and Weisman review the current conditions of the telecommunications industry and explore the merits of providing regulated firms with options in Incentive Regulation plans. They describe the difficulties regulators face in dealing with incomplete information about companies' activities, in establishing credibility, and in avoiding the dangers of asymmteric Regulation (where Regulation imposed on new entrants differs from rules for established companies). They close by analyzing competition in long-distance telephone services as it pertains to Incentive Regulation and by reviewing recent empirial studies.
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Revenue sharing in Incentive Regulation plans
Information Economics and Policy, 1996Co-Authors: David E M Sappington, Dennis L WeismanAbstract:Abstract We examine the merits of revenue sharing in Incentive Regulation plans. We demonstrate how revenue sharing can be employed to construct an Incentive plan that ensures strict gains for both consumers and the regulated firm relative to a pure profit-sharing plan. Revenue sharing is also shown to diminish Incentives for wasteful expenditures and price discrimination by the regulated firm, and to limit regulatory expropriation of the firm.
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Potential pitfalls in empirical investigations of the effects of Incentive Regulation plans in the telecommunications industry
Information Economics and Policy, 1996Co-Authors: David E M Sappington, Dennis L WeismanAbstract:Abstract Measuring the impact of Incentive Regulation is a difficult and subtle exercise. We identify seven pitfalls that can arise when attempting to measure the effects of Incentive Regulation in the telecommunications industry. We also offer suggestions on how to avoid these pitfalls in future empirical work.
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Seven Myths About Incentive Regulation
Pricing and Regulatory Innovations Under Increasing Competition, 1996Co-Authors: David E M Sappington, Dennis L WeismanAbstract:Today’s telecommunications industry exhibits a great variety of regulatory plans. As table 1 indicates, state governments in the United States control the intrastate operations of the regional Bell operating companies with plans that range from standard rate-of-return Regulation to nearly complete deRegulation.2 Intermediate forms of Incentive Regulation between these two extremes are: (1) rate case and pricing moratoria, whereby existing pricing structures remain intact and the firm’s earnings are not investigated for a specified period of time (often one to three years); (2) earnings or revenue sharing plans, wherein realized earnings or revenues in excess of authorized levels are shared by the regulated firm and its customers according to a pre-specified schedule; (3) price-cap Regulation plans, which specify the percentage reduction in average price levels that the regulated firm must implement annually; and (4) deRegulation of competitive services, whereby certain services are removed from the realm of regulatory scrutiny and control because competitive forces are deemed sufficient to control the exercise of market power.
