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The Economic Logic for Conditioning Bell Entry into Long Market Distance on the Prior Opening of Local Markets

Author

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  • Schwartz, M.

Abstract

One of the most important and most contentious issues for regulation and competition raised by the 1996 Telecommunications Act is when to authorize the regional Bell companies to offer long-distance services. The Department of Justice (DOJ) adopted a standard requiring that a Bell's local market must first be irreversibly open to competition. This paper analyzes the competitive benefits and costs of authorizing Bell entry, explains the DOJ's standard, and argues that the incentives created by this standard will help achieve the Act's competitive goals more efficiently and rapidly than other standards, ultimately reducing the need for intrusive regulation.

Suggested Citation

  • Schwartz, M., 2000. "The Economic Logic for Conditioning Bell Entry into Long Market Distance on the Prior Opening of Local Markets," Papers 00-4, U.S. Department of Justice - Antitrust Division.
    • Handle: RePEc:fth:usjuat:00-4
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    Cited by:

    1. Koski, Heli A. & Majumdar, Sumit K., 2002. "Paragons of virtue? Competitor entry and the strategies of incumbents in the U.S. local telecommunications industry," Information Economics and Policy, Elsevier, vol. 14(4), pages 453-480, December.

    More about this item

    Keywords

    COMPETITION ; LICENCES ; MARKET STRUCTURE ; TELECOMMUNICATIONS;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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