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Competition and investment in telecommunications

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Author Info

  • Inung Jung
  • Philip Gayle
  • Dale Lehman

Abstract

This study examines the relationship between competition and investment by Incumbert Local Exchange Carriers (ILECs) in US telecommunications markets. A panel data model and a dynamic panel data model that have not been used in previous studies are applied in this analysis. Results of the panel data model suggest that investment by ILECs is positively related to the market share of Competitive Local Exchange Carriers (CLECs), and negatively to the absolute number of CLECs. However, once the persistence in ILECs' investment behaviour is controlled for using the dynamic model, our measures of the existing competition from CLECs, at best, have a weak effect on ILECs' investment. Therefore, while strengthening competition in the telecom sector may be key to restoring telecom investment, it is uncertain that competition spurred by the mandatory sharing policy in this sector stimulates ILECs' incentives to invest in new infrastructure.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 40 (2008)
Issue (Month): 3 ()
Pages: 303-313

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Handle: RePEc:taf:applec:v:40:y:2008:i:3:p:303-313

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Web page: http://www.tandfonline.com/RAEC20

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Cited by:
  1. Lestage, Romain & Flacher, David & Kim, Yeonbae & Kim, Jihwan & Kim, Yunhee, 2013. "Competition and investment in telecommunications: Does competition have the same impact on investment by private and state-owned firms?," Information Economics and Policy, Elsevier, vol. 25(1), pages 41-50.
  2. Briglauer, Wolfgang, 2013. "The impact of regulation and competition on the adoption of fibre-based broadband services: Recent evidence from the European Union member states," 24th European Regional ITS Conference, Florence 2013 88494, International Telecommunications Society (ITS).
  3. Pachis, Athanasios & Yannelis, Demetrius, 2013. "The relation between local loop unbundling and investment in fixed telephony," 24th European Regional ITS Conference, Florence 2013 88470, International Telecommunications Society (ITS).
  4. Evans, Lewis & Weisman, Dennis L., 2008. "Designing Competition Policy for Telecommunications," Working paper 608, Regulation2point0.

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