Regulating Telecommunications: Lessons from U.S. Price Cap Experience
Author: Jeffrey H. Rohlfs Date: 1/1/1996 (PDF, 200KB)
The United States has recently switched from rate-of-return regulation to price cap regulation of monopoly services. Reviewing the U.S. experience, Jeffrey Rohlfs argues that since price caps promote productivity, reduce incentives to cross-subsidize, and are simpler to administer and therefore more transparent and less subject to abuse, developing countries should bypass rate-of-return regulation and opt for price caps.