Market Power in U.S. Broadband Services

39 Pages Posted: 18 Dec 2009  

Thomas W. Hazlett

Clemson University

Dennis Weisman

Kansas State University - Department of Economics

Date Written: December 18, 2009

Abstract

The U.S. telecommunications industry has come under scrutiny amid concerns that regulatory policies have been too permissive. These concerns are perhaps most prominent in the residential broadband market where there is a perception that the “duopoly” between telephone carriers (DSL suppliers) and cable TV operators (cable modem services) has given rise to anti-competitive behavior. The presence of market power is a testable hypothesis that cannot be deduced solely from market shares or price-cost margins. We develop an economic analysis that incorporates both static and dynamic factors to examine the extant marketplace evidence. The data suggest that “duopoly” broadband providers do not generate supra-competitive returns. Public policies to regulate broadband providers should be informed by these market conditions.

Keywords: antitrust, atomistic, Christine Varney, competition, efficiency, FCC, Federal Communications Commission, Herfindahl-Hirschman Index, ISPs, Internet service providers, James Bonbright, Joseph Schumpeter, Lerner index, 1996 Telecommunications Act, Ronald Coase, wireline

JEL Classification: K21, K23, L51, L96

Suggested Citation

Hazlett, Thomas W. and Weisman, Dennis, Market Power in U.S. Broadband Services (December 18, 2009). George Mason Law & Economics Research Paper No. 09-69. Available at SSRN: https://ssrn.com/abstract=1525568 or http://dx.doi.org/10.2139/ssrn.1525568

Thomas W. Hazlett (Contact Author)

Clemson University ( email )

Clemson, SC 29634
United States
8646563430 (Phone)
8646564192 (Fax)

HOME PAGE: http://hazlett.people.clemson.edu/

Dennis Weisman

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

Paper statistics

Downloads
252
Rank
99,798
Abstract Views
1,720