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Local Competition, Multimarket Contact, and Product Quality: Evidence From Internet Service Provision

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  • Kyle Wilson

    (Pomona College)

Abstract

I investigate the effect of competition on quality in the internet service provision industry: I examine both local competition within markets and multimarket contact among firms across markets. This industry offers an ideal setting, as quality is both objective and measurable. I use data from speedtest.net from 2008 to 2014 to estimate a reduced-form model of the effects of local competition and multimarket contact on realized consumer download speeds. I find that increased multimarket contact leads to decreased download speeds, which is consistent with the mutual forbearance hypothesis. I also find that duopolies lead to faster download speeds than do monopolies, but that further increases in the number of competitors decrease speeds.

Suggested Citation

  • Kyle Wilson, 2025. "Local Competition, Multimarket Contact, and Product Quality: Evidence From Internet Service Provision," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 66(4), pages 439-467, April.
    • Handle: RePEc:kap:revind:v:66:y:2025:i:4:d:10.1007_s11151-023-09928-8
    DOI: 10.1007/s11151-023-09928-8
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    More about this item

    Keywords

    Multimarket contact; Telecommunications; Internet; Broadband; Product quality;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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