Abstract

The past decade has witnessed a surge of pricing innovations in the U.S. telecommunications industry. This book systematically reviews recent innovations in the economic theory of pricing and extends results to the conditions which characterise telecommunications markets. The implementation of normative pricing theory is examined in selected US telephone tariffs, providing a rich and diverse data base and laboratory for examining the practical consequences of pricing innovations. The authors develop and illuminate the relationships between the normative economic theory of pricing - with its objectives of social welfare, economic efficiency, and fairness - and telecommunications pricing as it is practised by business and regulators. The general theoretical pricing principles and lessons of US pricing experience discussed are directly applicable to telecommunications services in other countries, and to numerous other industries including electricity, gas, rail and air transport, and postal services, as well as economists studying the economic theory of pricing.