A Voluntary Subsidy Scheme for the Accounting Rate System in International Telecommunications Industries.

This paper proposes a new scheme complementing the current accounting rate system for international telecommunications industries. From an economic standpoint, the current accounting rate system results in high service charges as well as inefficient production. This is a source of contention between developed countries and less developed countries. Although there have been discussions concerning the disadvantages of the accounting rate system, a concrete and workable alternative has not yet been proposed. In this paper, we shall propose a method, taking into account the utilization of a subsidy from a developed country to a less developed country to reduce the accounting rate in international telecommunications, and this scheme brings a second-best solution. Copyright 1999 by Kluwer Academic Publishers