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The Breakup of the Bell System and its Impact on US Innovation

Author

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  • Watzinger, Martin

    (University of Muenster and CEPR)

  • Schnitzer, Monika

    (LMU Munich and CEPR)

Abstract

We analyze the effects of the 1984 breakup of the Bell System on the rate, diversity, and direction of US innovation. In the antitrust case leading to the breakup, AT&T, the holding company of the Bell System, was accused of using exclusionary practices against competitors. The breakup was intended to end these practices. After the breakup, the scale and diversity of telecommunications innovation increased. Total patenting by US inventors related to telecommunications increased by 19%, driven by companies unrelated to the Bell System. Patenting by Bell's successor companies decreased, but not the number of top inventions.

Suggested Citation

  • Watzinger, Martin & Schnitzer, Monika, 2022. "The Breakup of the Bell System and its Impact on US Innovation," Rationality and Competition Discussion Paper Series 341, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:341
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    References listed on IDEAS

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    Cited by:

    1. Robin Mamrak, 2023. "Antitrust and (Foreign) Innovation: Evidence from the Xerox Case," Rationality and Competition Discussion Paper Series 396, CRC TRR 190 Rationality and Competition.
    2. Tania Babina & Simcha Barkai & Jessica Jeffers & Ezra Karger & Ekaterina Volkova, 2023. "Antitrust Enforcement Increases Economic Activity," Working Papers 23-50, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    Keywords

    antitrust; innovation; diversity; exclusionary practices;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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