|
Archive@NYU >
NET Institute >
NET Institute Working Papers Series >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/28487
|
| Title: | Entry Threat and Entry Deterrence: The Timing of Broadband Rollout |
| Authors: | Xiao, Mo - University of Arizona
Orazem, Peter F. - Iowa State University |
| Keywords: | Entry, Entry Threat, Broadband Providers |
| Issue Date: | 2007 |
| Series/Report no.: | NET Institute Working Paper;07-09 |
| Abstract: | Past empirical literature provides strong evidence that competition
increases when new firms enter a market. However, rarely have economists
been able to examine how competition changes with the threat of entry.
This paper uses the evolution of the zip code level market structure of
facilities-based broadband providers from 1999 to 2004 to investigate
how a firm adjusts its entry strategy when facing the threat of
additional entrants. We identify the potential nth entrant into a local
market as threatened when a neighboring market houses more than n firms
providing broadband services. We first document that such a market is
more likely to accommodate more than n firms in the long run. Taking
account of endogeneity of entry into neighboring markets, we find that
the first 1 to 3 entrants significantly delay their entrance into an
open local market facing entry threat. We do not find evidence of
delayed entry for firms following the 3rd entrant. The evidence suggests
that the mere threat of entry may curb market power associated with
oligopolistic market structure. |
| URI: | http://hdl.handle.net/2451/28487 |
| Appears in Collections: | NET Institute Working Papers Series
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
