Skip to main content
SpringerLink
Log in

A Note on Measuring the Productivity Offset for Regulatory Purposes

  • Published:
Journal of Productivity Analysis Aims and scope Submit manuscript

Abstract

Calculation of the productivity offset or the X-factor used in setting price caps has a fundamental flaw when it is based on conventional growth accounting total factor productivity analysis. The problem is discussed in the context of incentive regulation used by the Federal Communications Commission in the United States and the appropriate correction is indicated. An example of the problem and its correction, using the access charge for interstate service in telecommunications, is provided. The correction shows that the appropriate X-factor is 12 percent greater than that based on conventional growth accounting total factor productivity analysis.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Armstrong, M., S. Cowan and J. Vickers. (1994). Regulatory Reform: Economic Analysis and British Experience. Cambridge: The MIT Press, Inc.

    Google Scholar 

  • Berndt, E. and M. Fuss. (1986). “Productivity Measurement with Adjustments for Variations in Capacity Utilization and Other Forms of Temporary Equilibrium.” Journal of Econometrics 33, 7-29.

    Google Scholar 

  • Council of Economic Advisors. (1999). Economic Report of the President. Washington: U.S. Government Printing Office.

    Google Scholar 

  • Crew, M. and P. Kleindorfer. (1996). “Incentive Regulation in the United Kingdom and the United States: Some Lessons.” Journal of Regulatory Economics 9, 211-225.

    Google Scholar 

  • Goldsmith, R. (1951). “A Perpetual Inventory of National Wealth.” Studies in Income and Wealth 14, 5-61.

    Google Scholar 

  • Jorgenson D. and Z. Griliches. (1967). “The Explanation of Productivity Change.” Review of Economic and Statistics 34, 249-283.

    Google Scholar 

  • Laffont, J. and J. Tirole. (2000). Competition in Telecommunications. Cambridge: The MIT Press.

    Google Scholar 

  • Sappington, D. and D. Weisman. (1996). Designing Incentive Regulation for the Telecommunications Industry. Cambridge: MIT Press, Inc.

    Google Scholar 

  • Sherman, R. (1985). “The Averch and Johnson Analysis of Public Utility Regulation Twenty Years Later.” Review of Industrial Organization 2, 178-193.

    Google Scholar 

  • Sherman, R. (1992). “Capital Waste in the Rate-of-Return Regulated Firm.” Journal of Regulatory Economics 4, 197-204.

    Google Scholar 

  • Viscusi, K., J. Vernon and J. Harrington. (2000). Economics of Regulation and Antitrust, 3rd ed. Cambridge: The MIT Press.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Competitive Pricing Division (Rm 5-A207), Common Carrier Bureau, Federal Communications Commission, 445 12th Street, SW, Washington, DC, 20554

    Noel D. Uri

Authors
  1. Noel D. Uri
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Uri, N.D. A Note on Measuring the Productivity Offset for Regulatory Purposes. Journal of Productivity Analysis 17, 201–211 (2002). https://doi.org/10.1023/A:1015055904013

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1015055904013

Search

Navigation