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COST STRUCTURE AND REGULATION IN THE TELECOMMUNICATIONS
INDUSTRY
by
Torna Omar Soro
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements of the Degree
DOCTOR OF PHILOSOPHY
(ECONOMICS)
December 2006
Copyright 2006 Torna Omar Soro
Object Description
| Title | Cost structure and regulation in the telecommunications industry |
| Author | Soro, Torna Omar |
| Author email | soro@usc.edu |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Economics |
| School | College of Letters, Arts and Sciences |
| Date defended/completed | 2006-04-27 |
| Restricted until | Unrestricted |
| Date published | 2006-09-27 |
| Advisor (committee chair) | Ridder, Geert |
| Advisor (committee member) | Han, Hill |
| Abstract | The U.S. telecommunications industry has been the subject of many studies since the divestiture of AT&T in 1984 and the introduction of competition into long-distance. In 1996, the US government introduced the telecommunication reform (1996 Telecommunications Act) that outlines the main rules for competition in the local telephone market. But until recently, the implementation of the 96-Telecommunications Act has been problematic and under investigation. This dissertation consists of three essays, each an application of econometrics and calibration techniques to the telecommunications industry. The first essay analyzes the subadditivity and cost complementarities issue in the U.S. telecommunications industry. I use a dynamic panel data approach to estimate the total cost function of the local exchange carriers. The estimated cost function is then used in the test for subadditivity and cost complementarities. I find that the Local exchange carriers' cost appears to be subadditive meaning that breaking up the local exchange carriers is not efficient in terms of cost saving. I also find that the cost generated by jointly producing local and toll calls is on average lower than not producing them jointly. This means that we have presence of cost complementarities. The wave of merging in the telecommunication industry may be explained by the presence of cost complementarities. The second essay estimates semiparametrically the scale economies in the telecommunication industry. The semiparametric model uses the translog cost function where output enters non-parametrically. The result shows the presence of scale economies in the local exchange carrier. The scale economies seem larger for small firms compared to big firms. This result may also explain the wave of merging and consolidation that is going on in the U.S telecommunications industry. The last essay compares the different regulatory models using an engineering cost proxy function.; The method used in our study is based on generated data from a computer modeling of the local telephone network instead of the traditional approach, which focuses on real data. Using the calibration technique I find that the incentive regulation performs better compared to traditional regulation mechanisms (cost plus regulation). Following the construction of "cocomo2", a computer software cost estimation model, I also develop an alternative mapping for effort and efficiency. |
| Keyword | cost structure; subadditivity test; cost complementarities |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Type | texts |
| Legacy record ID | usctheses-m46 |
| Rights | Soro, Torna Omar |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | http://www.usc.edu/isd/libraries/services/ask_a_librarian/email/ |
| Filename | etd-Soro-20060927 |
| Archival file | uscthesesreloadpub_Volume11/etd-Soro-20060927-0.pdf |
Description
| Title | Page 1 |
| Full text | COST STRUCTURE AND REGULATION IN THE TELECOMMUNICATIONS INDUSTRY by Torna Omar Soro A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements of the Degree DOCTOR OF PHILOSOPHY (ECONOMICS) December 2006 Copyright 2006 Torna Omar Soro |
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