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Summary

Do political regimes systematically impact the price of international long-distance phone calls? We argue that, compared to autocracies, democratic governments have stronger incentives to regulate the provision of telephone service efficiently. In contrast, autocracies have incentives to limit communication between their citizens and the rest of the world. We thus expect the price of international long-distance to vary with political regime. Controlling for other factors that may impact long-distance pricing – such as level of economic development – we test this hypothesis using a cross-section of 190 countries and find evidence of a democracy-discount. It costs less to call democracies by about 25 percent.