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Market Structure and Welfare in the Finnish Market for Long-Distance Telecommunications

Author

Listed:
  • Tom Björkroth

    (Finnish Postgraduate Programme in Economics and Åbo Akademi University, Department of Economics and Statistic, Finland)

Abstract

This paper attempts to measure the welfare effects associated with the opening of the Finnish market for long-distance voice telephony in 1993. It also focuses on the remaining potential welfare losses associated with imperfect competition in this market. The results suggest that entry benefited consumers substantially in terms of consumer surplus, while the change in operators’ net profits was negative. From 1993 onwards the potential relative welfare loss substantially decreased from about 40 per cent of sales revenues to about 11 per cent. However, the figures for the late 1990s strongly depend upon assumptions regarding market structure and price elasticity. Nevertheless, the results suggest that the potential relative welfare losses are not negligible.

Suggested Citation

  • Tom Björkroth, 2002. "Market Structure and Welfare in the Finnish Market for Long-Distance Telecommunications," Finnish Economic Papers, Finnish Economic Association, vol. 15(2), pages 87-101, Autumn.
    • Handle: RePEc:fep:journl:v:15:y:2002:i:2:p:87-101
    as

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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D60 - Microeconomics - - Welfare Economics - - - General

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