By Paul Eric Teske
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Extra info for After Divestiture: The Political Economy of State Telecommunications Regulation
The coalition against price changes includes small consumers, who may be inattentive prior to actual changes except for governmentfunded advocates, and potential competitors, who are more powerful in telecommunications regulation than normally perceived. Thus, my general theoretical hypothesis is that interest group influence approaches an equilibrium (S is near 1) in most states and we must analyze institutional variables to explain regulatory decisions. The interest group theory incorporates the strength of interest groups that provide input into the regulatory process from several different angles, the cleavages that develop on key issues, and the coalitions that form along these cleavages.
Studies after divestiture, however, have found that many firms are considering further bypass (Kraemer, 1985). This argument is flawed, however, because several new consulting firms, staffed with extelephone company engineers, can provide telecommunications management functions for large users. Or, they could have mixed elements of these different policies. If regulators change rates gradually, but not too slowly, they can avoid largescale uneconomic bypass and then monitor the changes in telecommunications markets as the prices are adjusted.
8 Research on twopart tariffs, usage pricing, peak load pricing, network externalities, demand elasticities, and cost function subadditivity supports the following conclusions. Access to the switched network is a separate service from usage as access allows incoming calls to be received without any outgoing usage, and access lines are related to individual subscribers, while usage equipment is shared. Telecommunications networks exhibit elements of positive externalities. This externality is not generally considered a public policy concern because private parties can handle it themselves easily by sharing initiation of calls in a manner they decide is equitable.