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Economic analysis of process innovation: The case study of the German telecommunication market

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  • Yang, Chuan
  • Kawashima, Yasuo

Abstract

The effects of a new firm's entry into the telecom service market are examined further. These consist of up- and downstream markets, corresponding to the first and second stages in game theory. When a new entrant can succeed in process innovation and lower production cost, entry of the entrant transforms the market structure into a Joint-Profit-Maximization monopoly under the European Commission (EC) constraint. However, the post-entry market becomes more competitive if the EC did not intervene the market. We observed that violation of the test does not necessarily mean the incumbent practices a margin squeeze. The EC does not prove that margin squeeze is a necessary and sufficient condition for the exit. Furthermore, Joint-Profit-Maximization monopoly can serve to explain why Japanese Telecoms fees are high.

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  • Yang, Chuan & Kawashima, Yasuo, 2024. "Economic analysis of process innovation: The case study of the German telecommunication market," Innovation and Green Development, Elsevier, vol. 3(1).
    • Handle: RePEc:eee:ingrde:v:3:y:2024:i:1:s2949753123000632
    DOI: 10.1016/j.igd.2023.100095
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    References listed on IDEAS

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    1. Jan Bouckaert & Frank Verboven, 2004. "Price Squeezes in a Regulatory Environment," Journal of Regulatory Economics, Springer, vol. 26(3), pages 321-351, August.
    2. Awan, Abdul Ghafoor & Yaqoob, Robina, 2023. "Economic value of introducing technology to improve productivity: An ARDL approach," Innovation and Green Development, Elsevier, vol. 2(3).
    3. Laura Ferrari Bravo & Paolo Siciliani, 2007. "Exclusionary Pricing And Consumers Harm: The European Commission'S Practice In The Dsl Market," Journal of Competition Law and Economics, Oxford University Press, vol. 3(2), pages 243-279.
    4. J. Gregory Sidak, 2008. "Abolishing The Price Squeeze As A Theory Of Antitrust Liability," Journal of Competition Law and Economics, Oxford University Press, vol. 4(2), pages 279-309.
    5. Dennis W. Carlton, 2008. "Should “Price Squeeze” Be A Recognized Form Of Anticompetitive Conduct?," Journal of Competition Law and Economics, Oxford University Press, vol. 4(2), pages 271-278.
    6. Alberto Heimler, 2010. "Is A Margin Squeeze An Antitrust Or A Regulatory Violation?," Journal of Competition Law and Economics, Oxford University Press, vol. 6(4), pages 879-890.
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    Cited by:

    1. Niu, Bingcheng, 2024. "Government environmental protection expenditure and national ESG performance: Global evidence," Innovation and Green Development, Elsevier, vol. 3(2).

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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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