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Do cross‐subsidies hinder telecommunications market entry?

Do cross‐subsidies hinder telecommunications market entry? Purpose – This study aims to examine competitive entry in the presence of cross‐subsidization of firms in the telecommunications industry. Design/methodology/approach – How variations in cross‐subsidies, received via the separations mechanism, influence firms to enter the territories of incumbents is assessed for the population of local exchange firms in the USA. Findings – Firms able to obtain greater cross‐subsidies, on average, experience less entry within their territories. Competition has evolved considerably in the telecommunications industry in the last two decades. Research limitations/implications – These results point to the need for evaluating cross‐subsidies, where these may still exist, so as to encourage entry. Originality/value – This article is the first to look at the consequences of an important regulatory phenomenon and its impact on competition. The results at the confluence of regulation and competition policies have potential applications across the world. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Info Emerald Publishing

Do cross‐subsidies hinder telecommunications market entry?

Sumit K. Majumdar
Info , Volume 13 (2): 12 – Mar 15, 2011
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References (45)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1463-6697
DOI
10.1108/14636691111121656
Publisher site
See Article on Publisher Site

Abstract

Purpose – This study aims to examine competitive entry in the presence of cross‐subsidization of firms in the telecommunications industry. Design/methodology/approach – How variations in cross‐subsidies, received via the separations mechanism, influence firms to enter the territories of incumbents is assessed for the population of local exchange firms in the USA. Findings – Firms able to obtain greater cross‐subsidies, on average, experience less entry within their territories. Competition has evolved considerably in the telecommunications industry in the last two decades. Research limitations/implications – These results point to the need for evaluating cross‐subsidies, where these may still exist, so as to encourage entry. Originality/value – This article is the first to look at the consequences of an important regulatory phenomenon and its impact on competition. The results at the confluence of regulation and competition policies have potential applications across the world.

Journal

Info – Emerald Publishing

Published: Mar 15, 2011

Keywords: Budgetary control; Subsidies; Market entry; Strategic management; Telecommunications

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