Market Consolidation and Productivity Growth in U.S. Wireline Telecommunications: Stochastic Frontier Analysis vs. Malmquist Index

Market Consolidation and Productivity Growth in U.S. Wireline Telecommunications: Stochastic... This study analyzes the merger effects for 25 Incumbent Local Exchange Carriers over the period 1996–2005 using stochastic frontier analysis with a time-varying inefficiency model. We further conduct a comparison of results between the stochastic frontier analysis and the Malmquist index method. The empirical results indicate that the sample of telecommunications firms has experienced deterioration in average productivity growth following mergers. Significantly, both approaches suggest that firms that do not merge underperform in terms of average productivity growth. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Market Consolidation and Productivity Growth in U.S. Wireline Telecommunications: Stochastic Frontier Analysis vs. Malmquist Index

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Publisher
Springer US
Copyright
Copyright © 2010 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-010-9245-9
Publisher site
See Article on Publisher Site

Abstract

This study analyzes the merger effects for 25 Incumbent Local Exchange Carriers over the period 1996–2005 using stochastic frontier analysis with a time-varying inefficiency model. We further conduct a comparison of results between the stochastic frontier analysis and the Malmquist index method. The empirical results indicate that the sample of telecommunications firms has experienced deterioration in average productivity growth following mergers. Significantly, both approaches suggest that firms that do not merge underperform in terms of average productivity growth.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Mar 31, 2010

References

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