The Breakup of the Bell System and its Impact on US Innovation

Martin Watzinger and Monika Schnitzer
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Monika Schnitzer: LMU Munich and CEPR

No 341, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We analyze the effects of the 1984 breakup of the Bell System on the rate, diversity, and direction of US innovation. In the antitrust case leading to the breakup, AT&T, the holding company of the Bell System, was accused of using exclusionary practices against competitors. The breakup was intended to end these practices. After the breakup, the scale and diversity of telecommunications innovation increased. Total patenting by US inventors related to telecommunications increased by 19%, driven by companies unrelated to the Bell System. Patenting by Bell's successor companies decreased, but not the number of top inventions.

Keywords: antitrust; innovation; diversity; exclusionary practices (search for similar items in EconPapers)
JEL-codes: K21 L40 O30 (search for similar items in EconPapers)
Date: 2022-10-10
New Economics Papers: this item is included in nep-his, nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: The Breakup of the Bell System and its Impact on US Innovation (2022)
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