Date of this Version
The RAND Journal of Economics
Local telecommunications competition was an important goal of the 1996 Telecommunications Act. We evaluate the consumer welfare effects of entry into residential local telephone service in New York State using household-level data from September 1999 to March 2003. We address the prevalence of nonlinear tariffs by developing a discrete/continuous demand model that allows for service bundling and unobservable provider quality. We find that the average subscriber to the entrants' services gains a monthly equivalent of $2.33, or 6.2% of her bill, in welfare from competition. These gains accrue primarily from firm differentiation and new plan introductions rather than from price effects.
This is the peer reviewed version of the following article: Nicholas Economides, Katja Seim, V. Brian Viard (2008), Quantifying the benefits of entry into local phone service, The Rand Journal of Economics, 39 (3), 699, which has been published in final form at http://dx.doi.org/10.1111/j.1756-2171.2008.00035.x . This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving: http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms .
entry, nonlinear pricing, telecommunications, discrete/continuous demand
Economides, N., Seim, K., & Viard, B. (2008). Quantifying the Benefits of Entry Into Local Phone Service. The RAND Journal of Economics, 39 (3), 699-730. http://dx.doi.org/10.1111/j.1756-2171.2008.00035.x
Date Posted: 27 November 2017
This document has been peer reviewed.