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Alternative regulation and the efficiency of local exchange carriers: evidence from the Ameritech states

By Trevor R. Roycroft

Abstract

This paper examines growth in total factor productivity (TFP) before and after the implementation of alternative regulatory schemes for Ameritech operating companies. A model of TFP growth developed by the FCC is used. Results indicate that the introduction of price cap and incentive regulation leads to statistically significant increases in TFP growth. Results indicate that regulators may need to increase current productivity offsets to achieve a more equitable sharing of productivity gains between shareholders and ratepayers.Total factor productivity (TFP) Price caps Incentive regulation Ameritech

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