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Enron Mail |
Jerry Hausman, Greg Leonard, and Greg Sidak have a new paper that may interest you. The abstract appears below.
To download the paper, go to http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=206474 The Consumer-Welfare Benefits from Bell Company Entry into Long-Distance Communications: Empirical Evidence from New York and Texas JERRY A. HAUSMAN Massachusetts Institute of Technology (MIT) ; National Bureau of Economic Research (NBER) ; Lexecon, Inc. GREGORY K. LEONARD Lexecon, Inc. J. GREGORY SIDAK American Enterprise Institute (AEI) Abstract: For years, the effect of entry by the Bell operating companies (BOCs) into in-region interLATA long-distance markets has been the subject of conjecture and debate. Although economic theory suggests why substantial price reductions will occur upon BOC entry, many regulatory economists nonetheless conjectured that such entry would not benefit consumers significantly. Now that regulators have issued the first authorizations for BOCs to commence in-region interLATA service, it is possible to test that conjecture empirically. In this Article, we report empirical findings that BOC entry has produced substantial consumer-welfare benefits in New York and Texas in the form of lower prices for long-distance service. We find statistically significant evidence that BOC entry enabled the average consumer to reap a 9-percent savings on her monthly interLATA bill in New York and a 23-percent savings in Texas. In addition, we find statistically significant evidence that competitive local exchange carriers (CLECs) have a substantially higher cumulative share of the local exchange market in states where BOC entry has occurred. This empirical evidence is highly relevant to the BOCs' many remaining applications to provide in-region interLATA service in other states. That evidence also reveals the extent to which the framework used by the Federal Communications Commission and the Department of Justice to evaluate BOC applications for in-region interLATA service has failed to account fully for the interests of consumers. This framework has assumed that BOC entry would not significantly lower long-distance prices. But the empirical evidence has demonstrated that this assumption is incorrect. In an attempt to remedy a perceived market failure, the FCC and the DOJ produced a regulatory failure whose losses in consumer welfare run into billions of dollars annually. J. Gregory Sidak F.K.Weyerhaeuser Fellow in Law and Economics American Enterprise Institute 1150 Seventeenth Street, NW Washington DC 20036 (202) 862-5892 phone (202) 862-7177 fax jgsidak@aei.org or jgsidak@aol.com You can access my abstracts/papers on the Social Science Research Network (SSRN) through the following URL http://papers.ssrn.com/author=206474 J. Gregory Sidak F.K.Weyerhaeuser Fellow in Law and Economics American Enterprise Institute 1150 Seventeenth Street, NW Washington DC 20036 (202) 862-5892 phone (202) 862-7177 fax jgsidak@aei.org or jgsidak@aol.com You can access my abstracts/papers on the Social Science Research Network (SSRN) through the following URL http://papers.ssrn.com/author=206474
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