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The Telecommunications Industry and Economic Growth: How the Market Structure Matters

  • Vahagn Jerbashian

This paper presents an endogenous growth model where, in line with the recent em- pirical evidence, the telecommunications industry (telecom) is an engine of growth. In such a framework, this paper analyzes the channels through which telecom con- tributes to economic growth and focuses on market structure analysis for telecom, in the light of the recent changes in it. This paper suggests how the market struc- ture of telecom and the competition type in the telecom market can matter for its contribution to economic growth. It also proposes the optimal market structure for telecom from the social welfare perspective. In addition, it suggests the direction of telecom policies which can improve social welfare, and uses its theoretical results for qualitative evaluation of the Telecommunications Act of 1996 and similar policies.

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Paper provided by The Center for Economic Research and Graduate Education - Economics Institute, Prague in its series CERGE-EI Working Papers with number wp431.

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Date of creation: Jan 2011
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Handle: RePEc:cer:papers:wp431
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