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The competitive incentives of vertically integrated local exchange carriers: An economic and policy analysis
Author(s) -
Sibley David S.,
Weisman Dennis L.
Publication year - 1998
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/(sici)1520-6688(199824)17:1<74::aid-pam5>3.0.co;2-e
Subject(s) - legislation , competitor analysis , commission , incentive , competition (biology) , business , deregulation , public interest , public policy , barriers to entry , public economics , economics , industrial organization , market economy , market structure , finance , marketing , law , economic growth , political science , ecology , biology
The U.S. Congress passed sweeping telecommunications reform legislation in 1996 that will enable the Regional Bell Operating Companies (RBOCs) to enter the interLATA long‐distance market once certain conditions are met. This legislation empowers the state public service commissions, the Federal Communications Commission and the Justice Department to determine collectively when RBOC entry into interLATA long‐distance markets satisfies the public interest. This article reveals that as long as RBOC long‐distance market shares remain below certain critical levels, the RBOCs do not have the incentives (despite having the opportunity) to discriminate against their downstream competitors. These findings suggest that a public policy focused exclusively on eliminating the opportunity to discriminate may needlessly delay RBOC entry into interLATA markets and thereby deprive consumers of the benefits of enhanced competition.