Competition in the Interexchange Telecommunication Market
AbstractUsing 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.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Law and Economics.
Volume (Year): 46 (2003)
Issue (Month): 1 (April)
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Web page: http://www.journals.uchicago.edu/JLE/
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