Bureaucrats as entrepreneurs: Do municipal telecommunications providers hinder private entrepreneurs?

Abstract

Abstract:We consider how government-owned enterprises affect privately owned rivals. Specifically, we compare the types of markets that municipally owned telecommunications providers in the United States serve to the types of markets that competitive local exchange carriers (CLECs) serve. We find that CLECs focus on potential profitability while municipalities appear to respond to other factors, such as political considerations or the desire to provide competition to incumbents. As a result, municipal providers tend to serve markets that CLECs do not. We also find that the presence of a municipal provider in a market does not affect the probability that a CLEC also serves that market. Our results suggest municipalities may not pose a significant competitive threat to CLECs and do not preclude CLEC participation.

Subsidies and Distorted Markets: Do Telecom Subsidies Affect Competition?

“…The significant, positive coefficient in our sixth model may indicate that the entrants in small, high cost study areas are largely municipal providers. Hauge et al (2008) find that municipal providers of telecommunications compete more with incumbents than with privately owned new entrants, which is consistent with our second model, and that municipal providers primarily enter markets in small, rural communities where privately owned entrants choose not to go, which is consistent with our sixth model. The results of the initial estimates as presented above provide us with the foundation for testing our first hypothesis.…”

“…15 Let L L represent an entrant's cost for serving a customer in the low cost region of the study area. Research indicates entrants typically serve such low cost regions rather than entering high cost regions (Hauge et al, 2008). Assume that all else equal, customers prefer lower prices to higher prices, so the market share that the entrant gains in the low cost region is greater the lower its prices are relative to the prices of the incumbent.…”

Funding Universal Service: The Effect of Telecommunications Subsidy Programs on Competition and Retail Prices

“…Let L where L < A represent an entrant's cost for serving a customer in a low cost area of the study area. Research indicates entrants typically serve such low cost areas (Hauge et al, 2005).…”

Public and Private Investments in Regulated Network Industries: Coordination and Competition Issues

“…[State intervention] could affect investment already made by broadband operators on market terms and significantly undermine the incentives of market operators to invest in the first place." Even if the few evidence for the USA (see Hauge, Jamison, and Gentry (2008)) 1 Note that other sectors such as transportation can also suffer from the same problem. Indeed, private firms may compete with public ones for managing competing airports or ferry lines.…”