A Goal Programming/Constrained Regression Review of the Bell System Breakup.

The recently implemented U.S. court decision to break up Bell American Telephone Telegraph Co. to accord with U.S. anti-trust laws is also proving to be influential in other countries. Econometric studies commissioned by the Anti-Trust Division of the U.S. Justice Department used flexible functional forms to demonstrate that the evidence failed to show that Bell was a natural monopoly. This same evidence is reviewed via goal programmingconstrained regression models to reach an exactly opposite conclusion. The two approaches are compared and shortcomings and deficiencies in the econometric modeling, statistics and statistical optimization principles utilized in Bell System studies are examined in detail. Additional keywords Cost models Econometric models Economic and statistical tests Tablesdata Operations research. Author