The US residential broadband market is commonly characterized as a duopoly consisting of telephone carriers (digital subscriber lines) and cable TV operators (cable modems). The implication is drawn that market power obtains; this, in turn, drives recommendations for new competition policy remedies. Yet, market power cannot be directly deduced from market shares or price-cost margins. We develop an economic analysis that examines both static and dynamic factors in considering market power, finding that fixed broadband providers do not appear to generate supra-competitive returns. Public policies to regulate broadband providers should be informed by these marketplace conditions.
Review of Industrial Organization – Springer Journals
Published: Mar 20, 2011
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