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The Role of Incentives for Opening Monopoly Markets: Comparing GTE and BOC Cooperation with Local Entrants

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  • Federico Mini

Abstract

While the 1996 Telecommunications Act requires all incumbent local telephone companies to cooperate with local entrants, section 271 of the Act provides the Bell companies but not GTE additional incentives to cooperate. Using an original data set, I compare the negotiations of AT&T, as a local entrant, with GTE and with the Bell companies in states where both operate. My results suggest that the differential incentives matter: The Bells accommodate entry more than does GTE, as evidenced in quicker agreements, less litigation, and more favorable prices offered for network access. Consistent with this, there is more entry into Bell territories.

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  • Federico Mini, 2001. "The Role of Incentives for Opening Monopoly Markets: Comparing GTE and BOC Cooperation with Local Entrants," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 379-414, September.
    • Handle: RePEc:bla:jindec:v:49:y:2001:i:3:p:379-414
    DOI: 10.1111/1467-6451.00154
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    Cited by:

    1. Downes, Tom & Greenstein, Shane, 2007. "Understanding why universal service obligations may be unnecessary: The private development of local Internet access markets," Journal of Urban Economics, Elsevier, vol. 62(1), pages 2-26, July.
    2. Mattos, César, 2009. "Open access policies, regulated charges and non-price discrimination in telecommunications," Information Economics and Policy, Elsevier, vol. 21(4), pages 253-260, November.
    3. Avi Goldfarb & Mo Xiao, 2011. "Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets," American Economic Review, American Economic Association, vol. 101(7), pages 3130-3161, December.
    4. Shane Greenstein & Michael Mazzeo, 2003. "Differentiation Strategy and Market Deregulation: Local Telecommunication Entry in the Late 1990s," NBER Working Papers 9761, National Bureau of Economic Research, Inc.
    5. Ying Fan & Xiao Mo, 2010. "Estimating the Option Value of Waiting: A Dynamic Entry Game of the U.S. Local Telephone Competition," Working Papers 10-14, NET Institute.
    6. Ying Fan & Mo Xiao, 2015. "Competition and subsidies in the deregulated US local telephone industry," RAND Journal of Economics, RAND Corporation, vol. 46(4), pages 751-776, October.
    7. Mandy, David M. & Mayo, John W. & Sappington, David E.M., 2016. "Targeting efforts to raise rivals' costs: Moving from “Whether” to “Whom”," International Journal of Industrial Organization, Elsevier, vol. 46(C), pages 1-15.
    8. Neil Gandal, 2003. "New Horizons: Telecommunications Policy In Israel In The 21st Century," Israel Economic Review, Bank of Israel, vol. 1(2), pages 101-111.
    9. Brown, Keith S. & Zimmerman, Paul R., 2004. "The effect of Section 271 on competitive entry into local telecommunications markets: an initial evaluation," Information Economics and Policy, Elsevier, vol. 16(2), pages 215-233, June.
    10. Mo Xiao & Ying Fan, 2012. "Entry under Subsidy: the Competitive U.S. Local Telephone Industry," 2012 Meeting Papers 374, Society for Economic Dynamics.
    11. Bustos Alvaro E & Galetovic Alexander, 2009. "Vertical Integration and Sabotage with a Regulated Bottleneck Monopoly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-52, September.
    12. Susan M. V. Flaherty & Paul R. Zimmerman, 2005. "Does Allowing the Bells to Offer InterLATA Long‐Distance Service Affect Entry into Local Telephony?," Southern Economic Journal, John Wiley & Sons, vol. 72(1), pages 197-212, July.

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