Atlantic Economic Journal

, Volume 21, Issue 3, pp 38–46 | Cite as

Entry and competition in the canadian telecommunications industry: The case of alberta government telephones

  • Anastassios Gentzoglanis
Articles
  • 24 Downloads

Abstract

This paper analyzes the problems arising from the introduction of competition into a publicly-owned, relatively small telecommunications carrier, Alberta Government Telephones (AGT), in the light of new empirical work. It addresses the issue of cost subadditivity by estimating AGT's multi-output, multi-input production structure. The hypothesis that AGT is a natural monopoly cannot be rejected. For the period examined, it is found that important cost savings are realized from the existence of a sole supplier in the provision of both local and toll calls. Had competition been allowed in AGT's market during the period examined (1974–85), its cost structure would have been adversely affected. However, it appears that these cost savings are decreasing as the pace of introduction of modern transmission and switching equipment is introduced in its network. These technological changes may eventually render competition viable.

Keywords

Cost Saving International Economic Public Finance Technological Change Empirical Work 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Barten, A. P. "Maximum Likelihood Estimation of Complete Systems of Demand Equations,"European Economic Review, May 1967, pp. 7–73.Google Scholar
  2. Christensen, L. R.; Jorgenson, D. W.; Lau, L. J. "Transcendental Logarithmic Production Frontiers,"Review of Economics and Statistics, 55, 1973, pp. 28–45.Google Scholar
  3. Christensen, L. R.; Jorgenson, D. W. "The Measurement of U.S. Real Capital Input,"The Review of Income and Wealth, 15, 1969, pp. 293–320.Google Scholar
  4. Economic Council of Canada.Minding the Public's Business, Minister of Supply and Services Canada, 1986.Google Scholar
  5. Evans, D. S.; Heckman, J. J. "Natural Monopoly and the Bell System: Response to Charnes, Cooper, and Sueyoshi,"Management Science, 34, 1, January 1988, pp. 27–38.Google Scholar
  6. __. "Multiproduct Cost Function Estimates and Natural Monopoly Tests for the Bell System," in D. S. Evans ed.,Breaking Up Bell, New York, Amsterdam, and Oxford: North-Holland, 1983, pp. 253–82.Google Scholar
  7. __. "A Test for Subadditivity of the Cost Function with an Application to the Bell System,"American Economic Review, 74, 4, September 1984, pp. 615–23.Google Scholar
  8. Evans, D. S. (ed),Breaking Up Bell: Essays in Industrial Organization and Regulation, New York: North-Holland, 1983.Google Scholar
  9. Gentzoglanis, A.Cost Structure Characteristics of the Canadian Telecommunications Carriers: Some Empirical Evidence from Bell Canada and Alberta Government Telephones, unpublished Ph.D. dissertation, McGill University, Montreal, 1988.Google Scholar
  10. Olley, R. E. "Study of AGT Tobl Factor Productivity," January 19, 1987, unpublished.Google Scholar
  11. Zellner, A. "An Efficient Method for Estimating Seemingly Unrelated Regressions and Tests for Aggregation Bias,"Journal of the American Statistical Association, 57, June 1962, pp. 348–68.Google Scholar

Copyright information

© Atlantic Economic Society 1993

Authors and Affiliations

  • Anastassios Gentzoglanis
    • 2
    • 1
  1. 1.University of SherbrookeCanada
  2. 2.McGill UniversityCanada

Personalised recommendations