IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/v102y1994i1p103-26.html
   My bibliography  Save this article

Preying for Monopoly? The Case of Southern Bell Telephone Company, 1894-1912

Author

Listed:
  • Weiman, David F
  • Levin, Richard C

Abstract

Focusing on the Southern Bell Telephone Company, the authors propose a modified version of the predation hypothesis to explain Bell's 'natural' monopoly over local telephone service. Southern Bell effectively eliminated competition through a strategy of pricing below cost in response to entry, which deprived competitors of the cash flow required for expansion even if it failed to induce exit; investing in toll lines ahead of demand, isolating independent companies in smaller towns and rural areas, and forcing them to consolidate on favorable terms; and influencing local regulatory policy in larger cities to weaken rivals and ultimately to institutionalize the Bell monopoly. Copyright 1994 by University of Chicago Press.

Suggested Citation

  • Weiman, David F & Levin, Richard C, 1994. "Preying for Monopoly? The Case of Southern Bell Telephone Company, 1894-1912," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 103-126, February.
    • Handle: RePEc:ucp:jpolec:v:102:y:1994:i:1:p:103-26
    DOI: 10.1086/261923
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/261923
    File Function: full text
    Download Restriction: Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JPE for details.
    File URL: https://libkey.io/10.1086/261923?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
    2. Lipartito, Kenneth, 1989. "System Building at the Margin: The Problem of Public Choice in the Telephone Industry," The Journal of Economic History, Cambridge University Press, vol. 49(2), pages 323-336, June.
    3. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Farasat A.S. Bokhari & Weijie Yan, 2020. "Product line extensions under the threat of entry: evidence from the UK pharmaceuticals market," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2020-04, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    2. Nicholas Economides, 2003. "Telecommunications Regulation: An Introduction," Working Papers 03-22, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. de Haas, Samuel & Herold, Daniel & Schäfer, Jan Thomas, 2022. "Entry deterrence due to brand proliferation: Empirical evidence from the German interurban bus industry," International Journal of Industrial Organization, Elsevier, vol. 83(C).
    4. Stephen Martin, 2015. "Areeda–Turner and the Treatment of Exclusionary Pricing under U.S. Antitrust and EU Competition Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 46(3), pages 229-252, May.
    5. Dennis W. Carlton & Randal C. Picker, 2014. "Antitrust and Regulation," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 25-61, National Bureau of Economic Research, Inc.
    6. Fiona Scott Morton, 1997. "Entry and Predation: British Shipping Cartels 1879–1929," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(4), pages 679-724, December.
    7. Amanda B. Delp & John W. Mayo, 2017. "The Evolution of “Competition”: Lessons for 21st Century Telecommunications Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(4), pages 393-416, June.
    8. Kaserman, David L. & Mayo, John W., 1999. "Regulatory policies toward local exchange companies under emerging competition: guardrails or speed bumps on the information highway?," Information Economics and Policy, Elsevier, vol. 11(4), pages 367-388, December.
    9. Bernard, Darren, 2016. "Is the risk of product market predation a cost of disclosure?," Journal of Accounting and Economics, Elsevier, vol. 62(2), pages 305-325.

    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. Beomjin Choi & T. S. Raghu & Ajay Vinzé & Kevin J. Dooley, 2019. "Effectiveness of standards consortia: Social network perspectives," Information Systems Frontiers, Springer, vol. 21(2), pages 405-416, April.
    2. Slowak, André P., 2009. "Market fields structure & dynamics in industrial automation," FZID Discussion Papers 02-2009, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    3. Dietrich, Antje-Mareike, 2016. "Governmental platform intermediation to promote alternative fuel vehicles," Economics Department Working Paper Series 16, Technische Universität Braunschweig, Economics Department.
    4. Giovanna Devetag & Enrico Zaninotto, 2001. "The imperfect hiding: Some introductory concepts and preliminary issues on modularity," ROCK Working Papers 010, Department of Computer and Management Sciences, University of Trento, Italy, revised 13 Jun 2008.
    5. Corrado Benassi & Marcella Scrimitore, 2017. "Income Distribution in Network Markets," Journal of Industry, Competition and Trade, Springer, vol. 17(3), pages 251-271, September.
    6. Lange Rense & Oliva Terence A. & McDade Sean R., 2000. "An Algorithm for Estimating Multivariate Catastrophe Models: GEMCAT II," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 4(3), pages 1-34, October.
    7. Bai, Jiaru & Tang, Christopher S., 2022. "Can two competing on-demand service platforms be profitable?," International Journal of Production Economics, Elsevier, vol. 250(C).
    8. Netsanet Haile & Jörn Altmann, 2016. "Structural analysis of value creation in software service platforms," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(2), pages 129-142, May.
    9. Hess, Mike & Ricart, Joan E., 2002. "Managing customer switching costs: A framework for competing in the networked environment," IESE Research Papers D/472, IESE Business School.
    10. Wheatley, W. Parker, 2003. "Survival And Ownership Of Internet Marketplaces For Agriculture," 2003 Annual meeting, July 27-30, Montreal, Canada 22214, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Gruber, Harald, 2000. "The evolution of market structure in semiconductors: the role of product standards," Research Policy, Elsevier, vol. 29(6), pages 725-740, June.
    12. Raven, Michael & Blind, Knut, 2017. "The characteristics and impacts of scientific publications in biotechnology research referenced in standards," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 167-179.
    13. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    14. Schade, Sven & Buxmann, Peter, 2005. "A Prototype to Analyse and Support Standardization Decisions," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 35795, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    15. Pekka Sääskilahti, 2016. "Buying Decision Coordination and Monopoly Pricing of Network Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(2), pages 313-333, April.
    16. Netsanet Haile & Jorn Altmann, 2013. "Estimating the Value Obtained from Using a Software Service Platform," TEMEP Discussion Papers 2013105, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Aug 2013.
    17. Antje-Mareike Dietrich & Gernot Sieg, 2014. "Welfare Effects of Subsidizing a Dead-End Network of Less Polluting Vehicles," Networks and Spatial Economics, Springer, vol. 14(3), pages 335-355, December.
    18. Funk, Jeffrey L. & Methe, David T., 2001. "Market- and committee-based mechanisms in the creation and diffusion of global industry standards: the case of mobile communication," Research Policy, Elsevier, vol. 30(4), pages 589-610, April.
    19. Pranab Bardhan, 1993. "Economics of Development and the Development of Economics," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 129-142, Spring.
    20. Kim, Dongwook & Kim, Sungbum, 2022. "How do standards committees affect the success of a standard? Comparative analysis of RCS and VoLTE and proposed hybrid standards development model of open and bandwagon approaches," Telecommunications Policy, Elsevier, vol. 46(8).

    More about this item

    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:ucp:jpolec:v:102:y:1994:i:1:p:103-26. 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: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    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.