 Technology investment strategy in the presence of competitor entry: Broadband deployment in the US telecommunications industrySumit K Majumdar (), Birendra Mishra and Hsihui Chang Technology in Society, 2007, vol. 29, issue 4, 422-430 Abstract: We evaluated the broadband deployment strategy of incumbent firms in the local exchange sector of the US telecommunications industry (1994–1998), each of which must devise strategies for dealing with new firms entering their markets. We found that incumbents consistently under-invested in fiber optics that would have enabled them to upgrade their broadband infrastructure in the face of competitive entrants. Contrary to theories of entry deterrence, this behavior did not signal accommodation by monopolistic incumbents. Rather, it was consistent with an entrapment strategy: when a new firm entered and invested in capacity, the incumbents used their monopoly power to deny access or to provide poor-quality access, thereby making the competitors’ product quality worse than the incumbent's, leading to customer dissatisfaction and revenue losses that could eventually weaken the rival. Keywords: Broadband; Local exchange carriers; Entry deterrence; Monopoly; Network effects; Telecommunications Act 1996; Technology investment; Telecommunications; Investment strategy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:teinso:v:29:y:2007:i:4:p:422-430 DOI: 10.1016/j.techsoc.2007.08.004 Access Statistics for this article Technology in Society is currently edited by Charla Griffy-Brown More articles in Technology in Society from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.