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Market Power in US Broadband Services

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Abstract

The US residential broadband market is commonly characterized as a duopoly consisting of telephone carriers (digital subscriber lines) and cable TV operators (cable modems). The implication is drawn that market power obtains; this, in turn, drives recommendations for new competition policy remedies. Yet, market power cannot be directly deduced from market shares or price-cost margins. We develop an economic analysis that examines both static and dynamic factors in considering market power, finding that fixed broadband providers do not appear to generate supra-competitive returns. Public policies to regulate broadband providers should be informed by these marketplace conditions.

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Authors and Affiliations

  1. Department of Economics and School of Law, George Mason University, 325 Hazel Hall, 3301 Fairfax Drive, Arlington, VA, 22201, USA

    Thomas W. Hazlett

  2. Department of Economics, Kansas State University, 246 Waters Hall, Manhattan, KS, 66506, USA

    Dennis L. Weisman

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  1. Thomas W. Hazlett
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  2. Dennis L. Weisman
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Correspondence to Thomas W. Hazlett or Dennis L. Weisman.

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Hazlett, T.W., Weisman, D.L. Market Power in US Broadband Services. Rev Ind Organ 38, 151–171 (2011). https://doi.org/10.1007/s11151-011-9289-5

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