Competition in the New Jersey Communications Market: Implications for Reform
26 Pages Posted: 28 Mar 2011
Date Written: March 25, 2011
In general, economists agree that public-utility-style regulation is not only unnecessary but undesirable in competitive markets, where it inevitably distorts prices, slows innovation, discourages entry, and reduces consumer welfare. Thus, once competition develops in an industry, the appropriate policy response is to reduce regulation and allow consumers to benefit from the forces of competition.
This study examines telecommunications competition in the state of New Jersey, and concludes that competition has developed to the point where the regulatory reforms being considered by the state legislature would benefit consumers.
Other states, including California, Virginia, Indiana, Rhode Island and many others, have already reformed telecommunications regulation. Dire predictions that such reforms would lead to higher prices and other problems have not been borne out by experience. To the contrary, the results have been overwhelmingly positive, with higher rates of deployment of advanced services (especially in rural areas), increased rates of investment, and significant job creation.
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