Journal article
On the determinants of non-market strategy: The separations mechanism and cost shifting in the telecommunications industry
Telecommunications policy, v 34(11), pp 711-725
2010
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
This study examines the relationship between performance levels and the levels of cross-subsidy attained by local exchange carriers in the United States telecommunications industry. These cross-subsidies have been obtained by firms via their engagement in a separations mechanism, based on a cost allocation process, which telecommunications sector regulatory authorities use. Non-market strategies have assumed primacy in the activities of several sectors world-wide. Thus, understanding non-market strategic choices is important in the analysis of firms’ behavior and performance. Active engagement in the separations process is an important non-market strategy in the telecommunications industry, as a firm relatively successful in this activity can gain large cross-subsidies. The analysis establishes that less profitable firms obtain greater cross-subsidies. Once the profitability variable is decomposed into its two main components, which are productivity and price recovery, the impact of the profitability variable reduces. Firms which are relatively unproductive, as well as those unable to recover higher output prices, obtain relatively greater cross-subsidies. These results are inconsistent with the postulates of the strategic cost-allocation and behavior literatures but are consistent with
x-inefficiency and rent-seeking perspectives of firms’ strategic actions.
Metrics
Details
- Title
- On the determinants of non-market strategy: The separations mechanism and cost shifting in the telecommunications industry
- Creators
- Sumit K. Majumdar - The University of Texas at DallasHsihui Chang - Drexel University
- Publication Details
- Telecommunications policy, v 34(11), pp 711-725
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Accounting
- Web of Science ID
- WOS:000286305300005
- Scopus ID
- 2-s2.0-78049473347
- Other Identifier
- 991019168372304721
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InCites Highlights
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Communication
- Information Science & Library Science
- Telecommunications