The International Handbook of Telecommunications Economics, Volume I
Edited by Gary Madden
Chapter 4: Competition in local and long-distance telecommunications markets
4. Competition in local and longdistance telecommunications markets T. Randolph Beard and George S. Ford INTRODUCTION An encyclopedic analysis of competition in the local and long-distance telecommunications markets can take two forms. An empirical review of current and past market conditions can be provided with a focus on the existing degree of competition and the evolution, or demise, of competitive forces in various segments of the industry. This empirical analysis must be constantly updated, as the forces of technology and regulation are always exerting inﬂuence on the industry, invoking change at a rapid and sometimes unnatural pace. As a product of regulatory proceedings, such empirical reviews are widely available and continually produced. An alternative approach is to present economic tools that can be used to evaluate the extent and eﬀects of competition in telecommunications markets. To fully understand competition in telecommunications markets, economists must incorporate the institutional details of the telecommunications industry into their formal competitive analyses, whether theoretical or empirical. The standard models of competition, though frequently applied to the telecommunications industry, are often unsatisfactory due to the use of simplifying assumptions that fail to capture the salient features of the industry and its participants. The shortcomings of tractable models, to a large extent, cannot entirely be overcome. Nevertheless, the better the model represents the actual structure of an industry, the more useful that model will be. This chapter takes the latter approach and its purpose is to provide a review of conceptual and empirical analyses of...
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