Entry under Asymmetric Regulation

Entry under Asymmetric Regulation In recent years, the local telephone industry has evolved from a traditionally regulated structure of natural monopoly to one characterized as having a dominant firm and competitive fringe. Yet, legacy regulation from the monopoly era still remains in this new environment, and is often applied solely to the dominant firm. Economic theory suggests that asymmetric regulation of this sort will induce competitive entry. We find support for this theory by demonstrating that the amount of entry into local telephone markets is significantly higher when asymmetric quality-of-service standards are present. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Entry under Asymmetric Regulation

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2001 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1011184100043
Publisher site
See Article on Publisher Site

Abstract

In recent years, the local telephone industry has evolved from a traditionally regulated structure of natural monopoly to one characterized as having a dominant firm and competitive fringe. Yet, legacy regulation from the monopoly era still remains in this new environment, and is often applied solely to the dominant firm. Economic theory suggests that asymmetric regulation of this sort will induce competitive entry. We find support for this theory by demonstrating that the amount of entry into local telephone markets is significantly higher when asymmetric quality-of-service standards are present.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 3, 2004

References

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