The Political Economy of Deregulation: The Case of Intrastate Long Distance.

Observed variation in the decisions of state regulators to deregulate AT&T in the provision of intrastate interLATA telecommunications services provides useful data with which to test the economic theory of regulation against its principal alternative--the public interest theory. An empirical model of the decision to deregulate is specified and estimated. Our results lend empirical support to the economic theory of regulation and fail to support the public interest theory. The results also help to explain the lethargic pace of deregulation of this industry. Copyright 1993 by Kluwer Academic Publishers