Competition in the Interexchange Telecommunication Market

Clement G Krouse and Jongsur Park

Journal of Law and Economics, 2003, vol. 46, issue 1, 85-101

Abstract: Using an econometric model that allows the nature of the oligopoly interaction to be determined by the data, we estimate residual demand elasticities for the switched inter-LATA (local access and transport area) services of AT&T, MCI, and Sprint. For the 9-year period from the third quarter of 1989 to the first quarter of 1998, these estimates fall in the relatively inelastic -1.5 to -1.9 range. Statistical tests of the several elasticity relationships decisively reject hypotheses of perfect competition and a Cournot interaction but do not reject the hypothesis that the market functioned as a coordinated oligopoly.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlawec:y:2003:v:46:i:1:p:85-101

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