Bureaucrates as Entrepreneurs: Do Municipal Telecom Providers Hinder Private Entrepreneurs?
32 Pages Posted: 1 Aug 2012
Date Written: August 15, 2005
We consider how government-owned enterprises choose markets and affect privately-owned rivals. Specifically, we compare the types of markets that municipally-owned telecommunications providers in the United States serve to the types of markets that competitive local exchange companies (CLEC) serve. We find that municipalities and private firms make the decisions to provide telecommunications services differently. As a result, municipal providers tend to serve markets that CLECs do not. We also find that the presence of a municipal provider in a market does not affect the probability that a CLEC also serves that market. This research indicates that municipalities may not pose a significant competitive threat to CLECs, due primarily to demographic characteristics that encourage municipal as opposed to CLEC participation. It appears further that municipal participation does not preclude CLEC participation, although the reverse may be true. These results, and the finding that municipal entry restrictions have had little effect, are the first step in a more thorough analysis of municipal telecom provision.
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