Price competition in the market for business telecommunications services

Gregory L. Rosston (), Scott Savage () and Bradley S. Wimmer ()
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Gregory L. Rosston: Stanford Institute for Economic Policy Research
Bradley S. Wimmer: University of Nevada

Journal of Regulatory Economics, 2018, vol. 54, issue 1, No 5, 104 pages

Abstract: Abstract We estimate a two-step control-function model that relates incumbent prices for small-business telecommunications services to the number of facilities-based entrants, cost, demand, regulatory conditions, and a correction for endogenous market structure. Results show that the price effects from entry are understated in ordinary least squares regressions. When controlling for endogeneity, prices are negatively related to the number of entrants, indicating that markets without a competitive presence could exhibit market power. These findings should prove helpful to the Federal Communications Commission and other State regulators determining the conditions under which price and other forms of regulation may be relaxed.

Keywords: Market power; Market structure; Prices; Telecommunications (search for similar items in EconPapers)
JEL-codes: L1 L13 L96 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11149-018-9359-9

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