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Price competition in the market for business telecommunications services

  • Gregory L. Rosston
  • Scott J. Savage
  • Bradley S. Wimmer
Original article

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.

Keywords

Market power Market structure Prices Telecommunications 

JEL Classification

L1 L13 L96 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Stanford Institute for Economic Policy ResearchStanfordUSA
  2. 2.Department of EconomicsUniversity of ColoradoBoulderUSA
  3. 3.Department of EconomicsUniversity of NevadaLas VegasUSA

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