Abstract

Abstract : In continental Europe the state owned and controlled the telegraph network from the beginning. In the United Kingdom the state bought the private system in 1870. State ownership allowed the utilisation of economies of scope with the postal service and subsidisation to pursue non-market goals or to correct for market failure. An econometric model shows that although there were indeed considerable benefits from «postalisation», there were typically none from subsidies and large state organisations had higher unit costs than small. These last two findings suggest that European state telecommunications organisations in the nineteenth century were considerably less efficient than they could be, a result which American evidence supports.

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