IDEAS home Printed from https://ideas.repec.org/a/fep/journl/v15y2002i2p87-101.html
   My bibliography  Save this article

Market Structure and Welfare in the Finnish Market for Long-Distance Telecommunications

Author

Listed:
  • Tom Björkroth

    (Finnish Postgraduate Programme in Economics and Åbo Akademi University, Department of Economics and Statistic, Finland)

Abstract

This paper attempts to measure the welfare effects associated with the opening of the Finnish market for long-distance voice telephony in 1993. It also focuses on the remaining potential welfare losses associated with imperfect competition in this market. The results suggest that entry benefited consumers substantially in terms of consumer surplus, while the change in operators’ net profits was negative. From 1993 onwards the potential relative welfare loss substantially decreased from about 40 per cent of sales revenues to about 11 per cent. However, the figures for the late 1990s strongly depend upon assumptions regarding market structure and price elasticity. Nevertheless, the results suggest that the potential relative welfare losses are not negligible.

Suggested Citation

  • Tom Björkroth, 2002. "Market Structure and Welfare in the Finnish Market for Long-Distance Telecommunications," Finnish Economic Papers, Finnish Economic Association, vol. 15(2), pages 87-101, Autumn.
    • Handle: RePEc:fep:journl:v:15:y:2002:i:2:p:87-101
    as

    Download full text from publisher

    File URL: http://www.taloustieteellinenyhdistys.fi/images/stories/fep/f2002_2c.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barros, Pedro & Cadima, Nuno, 2000. "The Impact of Mobile Phone Diffusion on the Fixed-Link Network," CEPR Discussion Papers 2598, C.E.P.R. Discussion Papers.
    2. Chaim Fershtman & Ariel Pakes, 2000. "A Dynamic Oligopoly with Collusion and Price Wars," RAND Journal of Economics, The RAND Corporation, vol. 31(2), pages 207-236, Summer.
    3. Willner, Johan & Stahl, Leila, 1992. "Where are the welfare losses of imperfect competition large?," European Journal of Political Economy, Elsevier, vol. 8(3), pages 477-490, October.
    4. Hausman, Jerry & Tardiff, Timothy & Belinfante, Alexander, 1993. "The Effects of the Breakup of AT&T on Telephone Penetration in the United States," American Economic Review, American Economic Association, vol. 83(2), pages 178-184, May.
    5. repec:bla:econom:v:43:y:1976:i:171:p:267-74 is not listed on IDEAS
    6. Cowling, Keith & Mueller, Dennis C, 1978. "The Social Costs of Monopoly Power," Economic Journal, Royal Economic Society, vol. 88(352), pages 727-748, December.
    7. Paul MacAVOY, 1998. "Testing for Competitiveness of Markets for Long Distance Telephone Services: Competition Finally?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(3), pages 295-319, June.
    8. Shapiro, Carl, 1989. "Theories of oligopoly behavior," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 6, pages 329-414, Elsevier.
    9. repec:bla:scandj:v:84:y:1982:i:3:p:457-70 is not listed on IDEAS
    10. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bhuyan, Sanjib & Lopez, Rigoberto A., 1995. "Welfare Losses Under Alternative Oligopoly Regimes: The U.S. Food And Tobacco Manufacturing Industries," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(2), pages 1-11, December.
    2. Panayiotis Agisilaou, 2013. "Collusion in Industrial Economics and Optimally Designed Leniency Programmes - A Survey," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2013-03, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    3. Luís Cabral, 2018. "We’re Number 1: Price Wars for Market Share Leadership," Management Science, INFORMS, vol. 64(5), pages 2013-2030, May.
    4. Claude d'Aspremont & Rodolphe Dos Santos Ferreira & Louis-André Gérard-Varet, 2007. "Competition For Market Share Or For Market Size: Oligopolistic Equilibria With Varying Competitive Toughness," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 761-784, August.
    5. Kenneth Flamm, 1993. "Semiconductor Dependency and Strategic Trade Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(1 Microec), pages 249-333.
    6. Höffler, Felix & Kranz, Sebastian, 2011. "Legal unbundling can be a golden mean between vertical integration and ownership separation," International Journal of Industrial Organization, Elsevier, vol. 29(5), pages 576-588, September.
    7. Anusua Datta, 2003. "Divestiture and Its Implications for Innovation and Productivity Growth in U.S. Telecommunications," Southern Economic Journal, John Wiley & Sons, vol. 69(3), pages 644-658, January.
    8. Desmond (Ho-Fu) Lo & Stephen W. Salant, 2016. "The strategic use of early bird discounts for dealers," Quantitative Marketing and Economics (QME), Springer, vol. 14(2), pages 97-127, June.
    9. Guttorm Schjelderup & Lars Sorgard, 1997. "Transfer Pricing as a Strategic Device for Decentralized Multinationals," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(3), pages 277-290, July.
    10. Fernando Bernstein & Awi Federgruen, 2007. "Coordination Mechanisms for Supply Chains Under Price and Service Competition," Manufacturing & Service Operations Management, INFORMS, vol. 9(3), pages 242-262, January.
    11. James A. Brander & Barbara J. Spencer, 2015. "Endogenous Horizontal Product Differentiation under Bertrand and Cournot Competition: Revisiting the Bertrand Paradox," NBER Working Papers 20966, National Bureau of Economic Research, Inc.
    12. Michal Król, 2012. "‘Everything must go!’- Cournot as a Stable Convention within Strategic Supply Function Competition," Economics Discussion Paper Series 1217, Economics, The University of Manchester.
    13. Michał Król, 2017. "On the equivalence of quantity competition and supply function competition with sunk costs," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(2), pages 475-486, May.
    14. Moreno, Diego & Ubeda, Luis, 2006. "Capacity precommitment and price competition yield the Cournot outcome," Games and Economic Behavior, Elsevier, vol. 56(2), pages 323-332, August.
    15. Dan Kovenock & Raymond Deneckere & Tom Faith & Beth Allen, 2000. "Capacity precommitment as a barrier to entry: A Bertrand-Edgeworth approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 501-530.
    16. Kenneth Flamm, 1993. "Forward Pricing versus Fair Value: An Analytic Assessment of "Dumping" in DRAMS," NBER Chapters, in: Trade and Protectionism, pages 47-94, National Bureau of Economic Research, Inc.
    17. Oleksandr Shcherbakov & Naoki Wakamori, 2017. "Identifying the Degree of Collusion Under Proportional Reduction," Staff Working Papers 17-51, Bank of Canada.
    18. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, September.
    19. Hongbin Cai & Uday Rajan, 2005. "Incentive Compatible Collusion and Investment," Annals of Economics and Finance, Society for AEF, vol. 6(1), pages 37-52, May.
    20. Johannes Paha, 2017. "The Value of Collusion with Endogenous Capacity and Demand Uncertainty," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 623-653, September.

    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D60 - Microeconomics - - Welfare Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fep:journl:v:15:y:2002:i:2:p:87-101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Editorial Secretary (email available below). General contact details of provider: https://edirc.repec.org/data/talouea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.