X-efficiency in emerging competitive markets: The case of U.S. telecommunications

TLDR: In this article, two sets of performance measures are computed for local operating companies, using data envelopment analysis, for the years 1973, 1978, 1981, 1984 and 1987, showing that firms have benefited from incumbency positions in early exploitation of opening markets, but increasing pressures have induced firms to continuously strive towards frugality in resource consumption.

Abstract: Whether or not the progressive introduction of competition in the U.S. telecommunications industry has induced firm-level efficiencies is studied in this paper. Two sets of performance measures are computed for local operating companies, using data envelopment analysis, for the years 1973, 1978, 1981, 1984 and 1987. The first set measures whether firms are able to augment output values; the second set measures whether firms conserve resources or inputs. Both sets of measures improve between 1973 and 1987. The output value augmentation measures initially rise steeply and then plateau, while the input conservation measures rise more steadily. These indicate that firms have benefited from incumbency positions in early exploitation of opening markets, but increasing pressures have induced firms to continuously strive towards frugality in resource consumption.