The Role of Differentiation Strategy in Local Telecommunication Entry and Market Evolution: 1999-2002

28 Pages Posted: 4 Sep 2006

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

Abstract

We examine the role of differentiation among competitive local exchange carriers (CLECs) in nearly 1,200 U.S. cities in 1999 and 2002, before and after a valuation crash affecting communications firms. We test and reject the null hypothesis of homogeneous competitors. We also find strong evidence that differentiated CLECs account for both potential market demand and the business strategies of competitors when making their entry decisions. Finally, product heterogeneity in markets in 1999 helps predict how the structure of markets evolved through 2002. We conclude that the policy debate for local telecommunications regulation should account for differentiated behavior.

Suggested Citation

Greenstein, Shane M. and Mazzeo, Michael J., The Role of Differentiation Strategy in Local Telecommunication Entry and Market Evolution: 1999-2002. Journal of Industrial Economics, Vol. 54, No. 3, pp. 323-350, September 2006. Available at SSRN: https://ssrn.com/abstract=928029 or http://dx.doi.org/10.1111/j.1467-6451.2006.00291.x

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
23
Abstract Views
885
PlumX Metrics