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Market Power in US Broadband Services

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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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 (2011). https://doi.org/10.1007/s11151-011-9289-5

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  • DOI: https://doi.org/10.1007/s11151-011-9289-5

Keywords

  • Broadband
  • Efficiency
  • Market power
  • Telecommunications

JEL Classification

  • K21
  • K23
  • L51
  • L96