The coevolutionary relationship of technology, market and government regulation in telecommunications

Abstract

The technical change in telecommunications industry is tremendous, and it is exactly the continuous technological progress in telecommunications that brings sustained prosperity and development of the telecommunications industry. In this paper, the interplay between technology, market and government in telecommunications is discussed briefly in the first place, and then we introduce technology and government into the traditional SCP paradigm as essential factors which have economic meanings to construct a new industry analysis framework called TGM (SCP). Based on this framework, we propose the spiral coevolution model of telecommunications industry which elaborates on the interaction mechanism between technological innovation, government regulation and market evolution in telecommunications. Our study indicates that the evolution of the telecommunications industry is the result of technological innovation, government regulation and market competition, and among the three, technological innovation is the fundamental driving force. Compared to the "invisible hand"-market and "visible hand"government, we believe that technology is the "third hand" in telecommunications industry. The policy implications regarding these findings are given at the end of this paper.

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