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Dominant carrier market power in US international telephone markets

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Open access
Authors
Alleman, J.
Madden, Gary
Savage, Scott
Date
2003
Type
Journal Article

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Citation
Alleman, James and Madden, Gary and Savage, Scott. 2003. Dominant carrier market power in US international telephone markets. Applied Economics. 35 (6): pp. 665-673.
Source Title
Applied Economics
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Faculty
Curtin Business School
Communication Economics and Electronic Markets (CEEM) Research Centre
School
Communication Economics and Electronic Markets Research Centre (Curtin Research Centre)
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Abstract

An econometric model is used to examine market power in US international telephone markets. Lerner index estimates suggest AT&T's collection rate-cost margin was between 12% and 24% during 1991 to 1995. Although Lerner estimates imply deadweight welfare losses of up to US $261 million per annum, such losses are small compared to those from the inefficient pricing of international interconnection. Settlement rate-cost margins on US bilateral markets of approximately 89% translate into a US $4907 million transfer from consumers to carriers in 1995.