PROFITABILITY, PRODUCTIVITY AND PRICE RECOVERY PATTERNS IN THE US TELECOMMUNICATIONS INDUSTRY

We undertake a study where we examine changes in the profitability, pr oductivity and price recovery of firms in the U.S. telecommunications industry over a sixteen-year period. We assess the performance of thir ty-three major companies in the local-exchange sector over six time pe riods 1975, 1978, 1981, 1984, 1987 and 1990, using a performance analy sis model which disaggregates the profitability measure into two compo nents: productivity and price recovery. We demonstrate the computation of performance using this technique. Our study indicates that the ope ning up of markets has had a significant impact on different dimension s of performance in the telecommunications industry, also validating a number of theoretical assumptions about the impact that industry chan ges are expected to have on firms.