Differentiation Strategy and Market Deregulation: Local Telecommunication Entry in the Late 1990s

34 Pages Posted: 13 Jun 2003 Last revised: 3 Nov 2010

See all articles by Shane M. Greenstein

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit; National Bureau of Economic Research (NBER)

Michael J. Mazzeo

Northwestern University - Kellogg School of Management

Date Written: June 2003

Abstract

The authors examine the role of differentiation strategies for entry behavior in markets for local telecommunication services in the late 1990s. Whereas the prior literature has used models of interaction among homogenous firms, this research is motivated by the claim of entrants that they differ substantially in their product offerings and business strategies. Exploiting a new, detailed data set of Competitive Local Exchange Carriers (CLECs) entry into over 700 U.S. cities, the authors take advantage of recent developments in the analysis of entry and competition among differentiated firms. They test and reject the null hypothesis of homogeneous competitors. They also find strong evidence that CLECs account for both potential market demand and the business strategies of competitors when making their entry decisions. This suggests that firms' incentives to differentiate their services should shape the policy debate for competitive local telecommunications.

Suggested Citation

Greenstein, Shane M. and Mazzeo, Michael J., Differentiation Strategy and Market Deregulation: Local Telecommunication Entry in the Late 1990s (June 2003). NBER Working Paper No. w9761. Available at SSRN: https://ssrn.com/abstract=414259

Shane M. Greenstein (Contact Author)

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael J. Mazzeo

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-467-7551 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
59
Abstract Views
1,523
rank
365,218
PlumX Metrics