Do Entry Conditions Vary Over Time? Entry and Competition in the Broadband Market: 1999-2003
Posted: 4 Nov 2009
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Do Entry Conditions Vary Over Time? Entry and Competition in the Broadband Market: 1999-2003
Date Written: 2006
Abstract
The researchers Bresnahan and Reiss (1987, 1990, and1991) proposed the use of a firm's entry threshold ratio as a means ofmeasuring variance in a firm's competitive conduct as competition increaseswithin the industry. Building on the aforementioned research, this studyutilizes the entry and exit thresholds among firms in the broadband servicesindustry to understand competitiveness within the industry. An explanation of the Bresnahan and Reiss framework is provided.Then,the broadband market and its variations are defined utilizing data from 1999 to2003.The data originate from the Survey of High Speed Internet Providers,as compiled every six months by the National Telecommunications and InformationAdministration. Zip code tabulation areas (ZCTAs) were used to measure market size.Theresults of the data analysis are discussed and are compared to the Bresnahanand Reiss framework.The outcomes of the data analyses indicate theexistence of only small entry thresholds.When a new firm enters a marketof between one and three firms, the competitive conduct is only minimallyaffected. (AKP)
Keywords: Broadband market, National Telecommunications & Information Administration (US), Market competition, Market entry, Established firms, Information & communication technologies, Market exit, Startup rates, Startups, Internet industry, Internet technologies, Internet
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