Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets

Avi Goldfarb and Mo Xiao

American Economic Review, 2011, vol. 101, issue 7, 3130-61

Abstract: We examine US local telephone markets shortly after the Telecommunications Act of 1996. The data suggest that more experienced, better-educated managers tend to enter markets with fewer competitors. This motivates a structural econometric model based on behavioral game theory that allows heterogeneity in managers' ability to conjecture competitor behavior. We find that manager characteristics are key determinants in managerial ability. This estimate of ability predicts out-of-sample success. Also, the measured level of ability rises following a shakeout, suggesting that our behavioral assumptions may be most relevant early in the industry's life cycle. (JEL L96, L98, M10)

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (100)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.7.3130 (application/pdf)
http://www.aeaweb.org/aer/data/dec2011/20090403_data.zip dataset accompanying article (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Who thinks about the competition? Managerial ability and strategic entry in US local telephone markets (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:101:y:2011:i:7:p:3130-61

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().