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    Cross-Subsidies in Telecommunications: Roadblocks on the Road to More Intelligent Telephone Pricing

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    09_11YaleJonReg119_1994_.pdf
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    Author
    Kaserman, David
    Mayo, John
    
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    URI
    http://hdl.handle.net/20.500.13051/7901
    Abstract
    A decade ago, Alfred Kahn challenged regulators to adopt more efficient telephone pricing policies. They have yet to respond and instead have maintained a system of inefficient cross-subsidies. While some argue that the current system promotes universal telephone service, a careful examination reveals that the cross-subsidies do not further that goal. Professors Kaserman and Mayo argue that regulators maintain the current system because they believe that its pattern of cross-subsidization benefits a politically influential class-local residential customers. Kaserman and Mayo contend, however, that the regulators are wrong. the benefits from the current cross-subsidies are so diffused that abolishing them will not ultimately affect individual customers.
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