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THE ROLE OF DIFFERENTIATION STRATEGY IN LOCAL TELECOMMUNICATION ENTRY AND MARKET EVOLUTION: 1999-2002 -super-

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  • SHANE GREENSTEIN
  • MICHAEL MAZZEO

Abstract

We examine the role of differentiation among competitive local exchange carriers (CLECs) in nearly 1,200 U.S. cities in 1999 and 2002, before and after a valuation crash affecting communications firms. We test and reject the null hypothesis of homogeneous competitors. We also find strong evidence that differentiated CLECs account for both potential market demand and the business strategies of competitors when making their entry decisions. Finally, product heterogeneity in markets in 1999 helps predict how the structure of markets evolved through 2002. We conclude that the policy debate for local telecommunications regulation should account for differentiated behavior. Copyright Blackwell Publishing Ltd. 2006.

Suggested Citation

  • Shane Greenstein & Michael Mazzeo, 2006. "THE ROLE OF DIFFERENTIATION STRATEGY IN LOCAL TELECOMMUNICATION ENTRY AND MARKET EVOLUTION: 1999-2002 -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 54(3), pages 323-350, September.
  • Handle: RePEc:bla:jindec:v:54:y:2006:i:3:p:323-350
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    Cited by:

    1. Nicholas Economides & Katja Seim & V. Brian Viard, 2008. "Quantifying the benefits of entry into local phone service," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 699-730.
    2. Christos Genakos & Tommaso Valletti & Frank Verboven, 2017. "Evaluating Market Consolidation in Mobile Communications," CEP Discussion Papers dp1486, Centre for Economic Performance, LSE.
    3. Joan Calzada & Begoña García-Mariñoso & Jordi Ribé & Rafael Rubio-Campillo & David Suarez, 2017. "Fiber deployment in Spain," UB Economics Working Papers 2017/364, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    4. Gregory L. Rosston & Scott J. Savage & Bradley S. Wimmer, 2013. "Effect of Network Unbundling on Retail Prices: Evidence from the Telecommunications Act of 1996," Journal of Law and Economics, University of Chicago Press, vol. 56(2), pages 487-519.
    5. Kyle Wilson, 2016. "Does Public Competition Crowd Out Private Investment? Evidence from Municipal Provision of Internet Access," Working Papers 16-16, NET Institute.
    6. Huang, Ting Ting & Sun, Bruce Qiang, 2016. "The impact of the Internet on global industry: New evidence of Internet measurement," Research in International Business and Finance, Elsevier, vol. 37(C), pages 93-112.
    7. T. Randolph Beard, Jeffrey T. Macher, John W. Mayo, . "'Can you Hear Me Now?' Exit, Voice and Loyalty Under Increasing Competition," Journal of Law and Economics, University of Chicago Press, vol. 58(3).
    8. Naoaki Minamihashi, 2011. "Prevention of Competition by Competition Law: Evidence from Unbundling Regulation on Fiber-Optic Networks in Japan," ISER Discussion Paper 0804, Institute of Social and Economic Research, Osaka University.
    9. Tedi Skiti, 2017. "Entry Barriers and Technological Innovation in Broadband," Working Papers 17-11, NET Institute.
    10. Crandall, Robert W. & Eisenach, Jeffrey A. & Ingraham, Allan T., 2013. "The long-run effects of copper-loop unbundling and the implications for fiber," Telecommunications Policy, Elsevier, vol. 37(4), pages 262-281.
    11. Nikolaos Georgantzis & Carlos Gutiérrez-Hita, 2008. "Service provision on a network with endogenous consumption capacity," Working Papers. Serie AD 2008-01, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    12. Chris Forman & Nicolas van Zeebroeck, 2012. "From Wires to Partners: How the Internet Has Fostered R&D Collaborations Within Firms," Management Science, INFORMS, vol. 58(8), pages 1549-1568, August.
    13. Connolly Michelle & Prieger James E., 2013. "A Basic Analysis of Entry and Exit in the US Broadband Market, 2005–2008," Review of Network Economics, De Gruyter, vol. 12(3), pages 229-270, September.

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