Economic Efficiency of the Deregulation of Telecommunications Market

Research output: Contribution to journalArticle

Abstract

This paper examines the theoretical aspects of telecommunications market in Japan. The market has been developed through monopolistic supply by Nippon Telegraph and Telephone Public Corporation (NTTPC), which is now privatized and named Nippon Telegraph and Telephone Co. Ltd., (NTT). After privatization, three market competitors entered the supply of trunk line telecommunications services. They provide alternative services by leasing NTT’s terminal facilities. However, charges for long-distance calls have not been so lowered as much as were expected. Focusing on economic explanation and interpretation of the pricing of long-distance telecommunications in Japan, optimal two-part tariffs of the utility supplier faced with market contestants are designed in the context of the privatization of NTTPC, the entry of competitive firms and the innovation of relevant technology. Demand externalities, which are important for the economic analysis of telecommunications, are explicitly introduced. Optimal two-part tariffs are derived through (i) profit-maximizing, (ii) welfare maximizing, (iii) profit-constrained welfare maximizing formulae.

Original languageEnglish
Pages (from-to)161-179
Number of pages19
JournalStudies in Regional Science
Volume20
Issue number1
DOIs
Publication statusPublished - 1989
Externally publishedYes

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economic efficiency
deregulation
telecommunication
telephone
market
privatization
economics
corporation
profit
welfare
Japan
supply
leasing
economic analysis
supplier
pricing
innovation
firm
interpretation
demand

ASJC Scopus subject areas

  • Environmental Science(all)
  • Social Sciences(all)

Cite this

Economic Efficiency of the Deregulation of Telecommunications Market. / Mitomo, Hitoshi.

In: Studies in Regional Science, Vol. 20, No. 1, 1989, p. 161-179.

Research output: Contribution to journalArticle

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