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Innovation, Resource Constraints, and Mergers in Network Industries

15 Pages Posted: 30 Jan 2012  

Mark A Jamison

University of Florida - Warrington College of Business Administration, Public Utility Research Center

Janice Alane Hauge

University of North Texas

Date Written: August 15, 2011

Abstract

We analyze how resource constraints and market structure interact in network industries to impact innovation. This issue has arisen recently in the United States where AT&T proposed to acquire T-Mobile’s U.S. assets at least in part to obtain T-Mobile’s radio spectrum, which AT&T says it needs to effectively deploy fourth generation (4G) wireless communications services in the country. However, our analysis has implications for other potential mergers and competition issues in network industries. For example, there is growing concern in the United States and Europe about Google’s growing market share in many Internet markets. We find that innovation is more likely with larger firms in part because of their scale economies and also because of their incentives to respond to network effects. We also find that while smaller firms may feel discriminated against in terms of the quality of connectivity, they are actually better off with the larger firms in their markets.

Suggested Citation

Jamison, Mark A and Hauge, Janice Alane, Innovation, Resource Constraints, and Mergers in Network Industries (August 15, 2011). TPRC 2011. Available at SSRN: https://ssrn.com/abstract=1995164

Mark A. Jamison (Contact Author)

University of Florida - Warrington College of Business Administration, Public Utility Research Center ( email )

PO Box 117142
Gainesville, FL 32611
United States
352-392-6148 (Phone)
352-392-7796 (Fax)

HOME PAGE: http://warrington.ufl.edu/purc/facultyinfo.asp?WEBID=1217

Janice Alane Hauge

University of North Texas ( email )

1155 Union Circle #305340
Denton, TX 76203
United States
940-565-4544 (Phone)

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