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Dominant carrier market power in US international telephone markets

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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.

Document Type: Research Article


Affiliations: 1: Columbia University, Graduate School of Business, Suite I-A Uris Hall, New York, NY 10027, USA 2: Curtin University of Technology, Communication Economics and Electronic Markets Research Centre, GPO Box U1987, Perth, Western Australia 6845 3: University of Colorado at Boulder, Interdisciplinary Telecommunications Department, Campus Box 530, Boulder, Colorado 80309-0530, USA

Publication date: 2003-01-01

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