1st Edition
Competition and Techincal Change in the U.S. Telephone Industry
First published in 1997. While local telephone companies still maintain their monopolistic position, rapid technological advance in telecommunications is destroying the established market structure in the local telephone industry. The U.S. Telecommunications Act of 1996 aimed at eliminating any legal barrier which has suppressed technically feasible local competition. This study attempts to provide pro-competitive evidence on the technological or cost structure of the U.S. local telephone industry. In particular, the study presents strong evidence against cost subadditivity of local telephone companies and shows that local telephone companies have been isolated from the disciplinary effects of competition in comparison with their competitive counterparts. The study not only has policy implications for entry and competition in local telephone markets, but also provides a new approach to the measurement of embodied technical change.
I. Overview II. Measuring Embodied Technical Change 2.1. Introduction 2.2. Model of Measuring Embodied Technical Change 2.3. Empirical Specifications 2.4. Embodied Technical Change in the LECs 2.5. Summary III. Firm Size and Cost Subadditivity 3.1. Introduction 3.2. Methodology of the Test 3.3. Empirical Results 3.4. Summary IV. Competition and Productivity Growth 4.1. Introduction 4.2. Competition and Productivity Growth in the Telephone Industry 4.3. TFP Growth, Output Growth, and Input Quality Growth 4.4. TFP Growth Rate Regression 4.5. The Effects of Competition on Cost Decline 4.6. Summary V. Conclusions
Biography
Nakil Sung
