Measurement of TFP Growth for US Telecommunications

  • Jeffrey I. Bernstein
  • Charles J. Zarkadas
Part of the Contributions to Economics book series (CE)


Gains in productivity reflect the extent to which output from production processes grow at a faster rate than the inputs to these processes. Thus productivity growth is an indicator that measures productive efficiency over time. Various sources directly contribute to productivity gains, notably among them is technological progress. The significance of technological advance to national welfare implies that estimates of the rate of productivity growth shape views of the long-term productiveness of a firm, industry or national economy. The main focus of this study is to measure productivity growth for the US telecommunications industry for the period 1985 to 2001. Estimates of productivity growth rates also appear prominently in the regulation of the telecommunications industry. In the last decade and a half price-cap regulation has been adopted in the telecommunications industry by the US Federal Communications Commission (FCC) and in over thirty states.1 Pricecap regulation typically specifies an average rate at which the prices that a firm charges for its regulated services must decline, after adjusting for inflation. This rate is called the X factor, or offset. An important element in determining the rate of change in inflation-adjusted regulated prices is the productivity growth of the industry.


Productivity Growth Total Factor Productivity Federal Communication Commission Revenue Share Digital Subscriber Line 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Balk B (1995) Axiomatic price theory: A survey. International Statistical Review 63: 69–93CrossRefGoogle Scholar
  2. Bernstein JI, Mohnen P (1998) International R&D spillovers between US and Japanese R&D intensive sectors. Journal of International Economics 44: 315–38CrossRefGoogle Scholar
  3. Denny M, Fuss M, Waverman L (1981) The measurement and interpretation of total factor productivity in regulated industries, with an application to Canadian telecommunications. In: Cowing T, Stevenson M (eds) Productivity measurement in regulated industries. Academic Press, New York, pp 179–218Google Scholar
  4. Diewert WE (1976) Exact and superlative index numbers. Journal of Econometrics 4: 115–46CrossRefGoogle Scholar
  5. Diewert WE (1992) The measurement of productivity. Bulletin of Economic Research 44: 163–98CrossRefGoogle Scholar
  6. Eichhorn W, Voeller J (1976) Theory of the price index. Lecture Notes in Economics and Mathematical Systems 140. Springer-Verlag, BerlinGoogle Scholar
  7. FCC (1999) Third report and order. FCC 99-355Google Scholar
  8. FCC (1997) Price cap performance review for local exchange carriers. Fourth report and order. CC Docket No. 94-1. Second report and order. CC Docket No. 96-262Google Scholar
  9. FCC (2003) Trends in telephone service. Table 2.1, Table 2.2, Table 2.3 and Table 2.4, AugustGoogle Scholar
  10. Funke H, Voeller J (1978) A note of the characterization of Fisher’s ideal index. In: Eichhorn W, Henn R, Opitz O, Shephard RW (eds) Theory and applications of economic indices. Physica-Verlag, WurzburgGoogle Scholar
  11. Gollop FM (2000) The FCC X-factor: 1996-1998 update. Attachment 4 USTA comments, CC Docket No. 94-1 and 96-262Google Scholar
  12. Jorgenson DW (1986) Econometric methods for modeling producer behaviour. In: Griliches Z, Intriligator MD (eds) Handbook of econometrics, vol III. Elsevier Science Publishers BV, New York, pp 1842–915Google Scholar
  13. Landefeld JS, Parker RP (1997) BEA’s chain indexes, time series, and measures of longterm economic growth. Survey of Current Business 77: 58–68Google Scholar
  14. Sappington DEM (2002) Price regulation. In: Cave ME, Majumdar SK, Vogelsang I (eds) Handbook of telecommunications economics. Elsevier, Amsterdam, pp 227–98Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Jeffrey I. Bernstein
    • 1
  • Charles J. Zarkadas
    • 2
  1. 1.Department of EconomicsFaculty of Public Affairs and ManagementOttawa OntarioCanada
  2. 2.NERA Economic ConsultingCambridgeUSA

Personalised recommendations