Abstract
The telecommunications industries in the United States and the United Kingdom have undergone massive changes during the 1980s. This paper decomposes the total factor productivity growth of AT&T and British Telecom into their various components. It finds that while a great deal of the productivity increases apparently resulted from continuing scale economies, competition for AT&T and privatization of BT have been responsible for 17 percent and 25 percent of their respective gains in recent years. Among other variables, divestiture appears to have initially depressed AT&T's productivity growth, and competition for BT is too insignificant to yet have an impact.
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An earlier version of this paper was prepared for the Schumpeter Society Meetings, 1990. Gratitude is expressed to G. Brock, R. Crandall, I. Vogelsang, J. Wheatley, P. Wynns and anonymous reviewers of this journal for providing data and suggestions. Responsibility for remaining errors lies with the author.
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Kwoka, J.E. The effects of divestiture, privatization, and competition on productivity in U.S. and U.K. telecommunications. Rev Ind Organ 8, 49–61 (1993). https://doi.org/10.1007/BF01029767
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DOI: https://doi.org/10.1007/BF01029767