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Price competition in the market for business telecommunications services

Author

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  • Gregory L. Rosston

    (Stanford Institute for Economic Policy Research)

  • Scott J. Savage

    (University of Colorado)

  • Bradley S. Wimmer

    (University of Nevada)

Abstract

We estimate a two-step control-function model that relates incumbent prices for small-business telecommunications services to the number of facilities-based entrants, cost, demand, regulatory conditions, and a correction for endogenous market structure. Results show that the price effects from entry are understated in ordinary least squares regressions. When controlling for endogeneity, prices are negatively related to the number of entrants, indicating that markets without a competitive presence could exhibit market power. These findings should prove helpful to the Federal Communications Commission and other State regulators determining the conditions under which price and other forms of regulation may be relaxed.

Suggested Citation

  • Gregory L. Rosston & Scott J. Savage & Bradley S. Wimmer, 2018. "Price competition in the market for business telecommunications services," Journal of Regulatory Economics, Springer, vol. 54(1), pages 81-104, August.
    • Handle: RePEc:kap:regeco:v:54:y:2018:i:1:d:10.1007_s11149-018-9359-9
    DOI: 10.1007/s11149-018-9359-9
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    References listed on IDEAS

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    Cited by:

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    2. Aimene, Louise & Lebourges, Marc & Liang, Julienne, 2021. "Estimating the impact of co-investment on Fiber to the Home adoption and competition," Telecommunications Policy, Elsevier, vol. 45(10).

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    More about this item

    Keywords

    Market power; Market structure; Prices; Telecommunications;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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