DOES INCENTIVE COMPATIBLE MECHANISM DESIGN INDUCE COMPETITIVE ENTRY?

Sumit K Majumdar ()

Journal of Competition Law and Economics, 2011, vol. 7, issue 2, 427-453

Abstract: This article evaluates the impact of the introduction of incentive regulation on competitive entry in the territories of the firms making up the population of local exchange carriers in the United States between 1988 and 2001. The results show that the rate of return method and other intermediate incentive schemes have had a negative impact on competitive entry. Conversely, the introduction of pure price caps schemes had a positive and significant impact on competitive entry in incumbent telecommunications firms' markets. These results highlight the importance of proper and appropriate incentive compatible mechanism design in altering the playing field so that competitive entry can occur.

JEL-codes: L43 L51 L96 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:7:y:2011:i:2:p:427-453.

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Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

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