Retail Prices and Facility-Based Entry into the Telecommunications Market

David Gabel () and Carolyn Gideon ()
Additional contact information
David Gabel: Queens College, http://qcpages.qc.edu/Economics/faculty/gabel.html
Carolyn Gideon: Tufts University

No 05-15, Working Papers from NET Institute

Abstract: There is growing sentiment that rate rebalancing to eliminate cross subsidies between local business and local residential telephone markets is necessary to induce efficient entry in the residential market. If the elasticity of supply with respect to the relative prices for business and residential local service is high in both the local business and local residential markets, then the efficiency gains from rebalancing may be large. Alternatively, other factors related to differences in characteristics between business and residential local telephone markets, such as lower costs, lower elasticity of demand, and greater willingness-to-pay for quality or redundancy in the business segment of local telephone may be more important determinants of entry. In this paper we simultaneously measure the elasticity of supply in the business market with regards to the price of business services relative to the price of residential service, using entry, economic and demographic data a the wire center level. We find that business entry is driven by market demand and cost characteristics, and that the effect of cross subsidies in prices on entry is less clear.

Pages: 23 pages
Date: 2005-10, Revised 2005-10
New Economics Papers: this item is included in nep-com, nep-tid and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.netinst.org/Gabel_Gideon.pdf (application/pdf)
no

Related works:
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:net:wpaper:0515

Access Statistics for this paper

More papers in Working Papers from NET Institute
Bibliographic data for series maintained by Nicholas Economides ().