Dimensions: 6'' x 9'' AEI Press  (Washington) Publication Date: July 1996 Hardcover ISBN: 0844740594 Price: $ 35.00 Add to Cart   Examination Copies

In just the past dozen years, the majority of U.S. states, the Federal Communications Commission, and numerous foreign countries, have abandoned rate-of-return regulation in the telecommunications industry in favor of some form of incentive regulation. The Telecommunications Act of 1996, which supercedes in the Communications Act of 1934, mandates the use of incentive regulation. This book addresses four questions related to the striking transformation from rate-of-return regulation to incentive regulation in the telecommunications industry.

First, why has this widespread and rapid movement toward incentive regulation occurred in the industry? Second, what is the nature of the observed transistion from rate-of-return regulation to incentive regulation? Third, what are the ideal properties of sound, effective incentive regulation plans in the industry, and how do the plans that have been adopted compare with those ideals? Fourth, to what extent have the recent experiments with incentive regulation furthered important social goals?

This book applies new advances in economic theory regarding the asymmetry of information between firms and their regulators to the design of improved telecommunications regulation.

David E. M. Sappington is the Lanzillotti-McKethan Eminent Scholar at the University of Florida. Dennis L. Weisman is an associate professor of economics at Kansas State University and a member of the graduate faculty.