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Excessive(?) Entry of National Telecom Networks, 1990-2001

Author

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  • Christiaan Hogendorn

    () (Economics Department, Wesleyan University)

Abstract

We document entry and capacity expansion in US long-distance fiber-optic networks before and during the “telecom boom.” We disentangle the many swaps and leases between networks in order to measure owned route miles versus route miles shared with other carriers. Entry appears much more moderate when these shared miles are not counted. Strategic behavior can lead to excessive entry, and we find evidence of such behavior regarding total miles (including swaps and leases) but not regarding owned miles. We conclude that entry was excessive only with regard to swaps and leases, but not with regard to the physical building of the networks.

Suggested Citation

  • Christiaan Hogendorn, 2006. "Excessive(?) Entry of National Telecom Networks, 1990-2001," Wesleyan Economics Working Papers 2006-001, Wesleyan University, Department of Economics.
  • Handle: RePEc:wes:weswpa:2006-001
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    File URL: http://repec.wesleyan.edu/pdf/chogendorn/2006001_hogendorn.pdf
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    References listed on IDEAS

    as
    1. Faulhaber, Gerald R & Hogendorn, Christiaan, 2000. "The Market Structure of Broadband Telecommunications," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 305-329, September.
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    3. Fudenberg, Drew & Tirole, Jean, 1983. "Capital as a commitment: Strategic investment to deter mobility," Journal of Economic Theory, Elsevier, vol. 31(2), pages 227-250, December.
    4. Pittman Russell, 2005. "Structural Separation to Create Competition? The Case of Freight Railways," Review of Network Economics, De Gruyter, vol. 4(3), pages 1-16, September.
    5. Nicholas Economides, 2004. "The Economics of the Internet Backbone," Working Papers 04-23, NET Institute, revised Oct 2004.
    6. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    7. repec:reg:rpubli:115 is not listed on IDEAS
    8. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
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    Cited by:

    1. Germán Gutiérrez & Thomas Philippon, 2017. "Declining Competition and Investment in the U.S," NBER Working Papers 23583, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    telecommunications; investment; preemption;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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