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Do cross‐subsidies hinder telecommunications market entry?

Sumit K. Majumdar (Based at the University of Texas at Dallas, Richardson, Texas, USA)

info

ISSN: 1463-6697

Article publication date: 15 March 2011

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Abstract

Purpose

This study aims to examine competitive entry in the presence of cross‐subsidization of firms in the telecommunications industry.

Design/methodology/approach

How variations in cross‐subsidies, received via the separations mechanism, influence firms to enter the territories of incumbents is assessed for the population of local exchange firms in the USA.

Findings

Firms able to obtain greater cross‐subsidies, on average, experience less entry within their territories. Competition has evolved considerably in the telecommunications industry in the last two decades.

Research limitations/implications

These results point to the need for evaluating cross‐subsidies, where these may still exist, so as to encourage entry.

Originality/value

This article is the first to look at the consequences of an important regulatory phenomenon and its impact on competition. The results at the confluence of regulation and competition policies have potential applications across the world.

Keywords

Citation

Majumdar, S.K. (2011), "Do cross‐subsidies hinder telecommunications market entry?", info, Vol. 13 No. 2, pp. 85-96. https://doi.org/10.1108/14636691111121656

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

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