William Rogerson

Professor of Economics
Faculty Fellow, Institute for Policy Research
Northwestern University
Ph.D., Economics, California Institute of Technology, 1980
wrogerson@northwestern.edu

William Rogerson specializes in industrial organization and regulation. Industries and sectors of the economy that he has studied include telecommunications, health care, and defense procurement. He is currently working on a variety of research topics in telecommunications and regulation stimulated by having spent the 1998-99 academic year in Washington serving as the Chief Economist of the Federal Communications Commission. Topics he is working on include explicit universal service subsidies, regulating interconnection between competing networks, and the effects of unbundled access on broadband telecommunications providers.

Rogerson served as chair of the department of economics from 1996 to 1998. He has worked as a consultant for the Federal Trade Commission, Institute for Defense Analysis, Logistics Management Institute, Office of the Secretary of Defense (Program Analysis and Evaluation), RAND Corporation, and the U.S. Department of Justice. He is a Fellow of the Econometric Society and currently serves as a member of the Governor"s Economic Policy Council for the state of Illinois.

Current Projects

Open Access and Broadband Telecommunications. Federal and state regulators are faced with a vast array of new and challenging problems and issues created by the advent of new technologies that allow broadband internet connections to be provided to the home over the traditional telephone network, the cable television network, and possibly also over satellite networks. Traditional cost-based regulation is not well-suited to industries where technology and products are changing rapidly and there is a need for innovation, a diversity of approaches, and risk-taking. On the other hand, it may be necessary to force dominant providers to open up their networks to competitors in order to foster competition. The fact that incumbent local exchange carriers will provide broadband connections using many of the same facilities that are used to provide traditional circuit switched voice telephony makes it difficult for regulators to simultaneously adopt a hands-off attitude towards broadband activities while maintaining traditional regulatory restraints on voice telephony. Traditionally, the provision of local telephone service by incumbent local exchange carriers has been highly regulated while the provision of cable television service by local cable companies has been very lightly regulated. Therefore, if regulators simply continue to apply the same level of regulation to existing firms when they enter new lines of business, this creates the potential that firms providing relatively similar services might be subject to very different levels of regulatory oversight. The purpose of this project is to provide an economic framework for analyzing these issues and to provide guidance to policymakers. The first output from this project is the paper "The regulation of broadband telecommunications, The principle of regulating narrowly defined input bottlenecks, and incentives for investment and innovation," which advances a theory explaining why asymmetric regulatory treatment of incumbent local telephone companies and cable TV firms would create desirable incentives for innovation and investment.

Regulation of Interconnection. In industries where users connect to a network, such as telephone service or internet backbone service, there is always a risk that the largest carriers will attempt to take advantage of their situation by refusing to interconnect with, or at least make interconnection difficult with, smaller carriers. (If interconnection is unreliable, difficult, or expensive, customers of the smaller carrier will have an incentive to switch to the larger carrier since they will be able to reach more customers without the need to interconnect with another carrier.) Rogerson is exploring the extent to which an interconnection regime called "bill and keep" might allow the FCC to solve this problem with as minimal a regulatory presence as possible. Under this system, the originating carrier bills the originating customer for making the call and keeps all of the revenue itself (as opposed to giving some of the revenue to the terminating carrier.) The terminating carrier is required to accept all incoming calls and must look to the terminating customer for a source of revenue. Therefore no payments between carriers are necessary and no form of cost-based regulation of prices is required.

Selected Publications

"The regulation of broadband telecommunications: The principle of regulating narrowly defined input bottlenecks, and incentives for investment and innovation." University of Chicago Legal Forum (2000): 119-147.

"New economic perspectives on telecommunications regulation." The University of Chicago Law Review 67 (Fall 2000): 1489-1505.

"Intertemporal cost allocation and managerial investment incentives." Journal of Political Economy 105, 4 (1997): 770-795.

"Choice of treatment intensities by a nonprofit hospital under prospective pricing." Journal of Economics and Management Strategy 3, 1 (Spring 1994): 7-52.

"Economic incentives and the defense procurement process." Journal of Economic Perspectives 8, 4 (Fall 1994): 65-90.

"Overhead allocation and incentives for cost minimization in defense procurement." The Accounting Review 67, (1992): 671-690.