Multidimensional performance in telecommunications, regulation and competition: Analysing the European major players

In this paper we adopt the methodology developed by Banker et al. (Analyzing the underlying dimensions of firm profitability. Managerial and Decision Economics 1993;14:25-36) in order to investigate the dynamics of the different components of performance for the major European telecommunications operators in the period 1989-1993. The results show a general improvement in productivity levels and a reduction in the ratio between output and input prices. The best productivity performances were attained by the British and (to a lesser degree) the French utilities, while only British Telecommunications was remarkably reducing output prices. These findings are consistent with the view that incentive regulation is useful to enhance efficiency but the introduction and the promotion of competition seems to be more effective in reducing the price levels. (C) 2000 Elsevier Science B.V. All rights reserved.