A revised theory of contestable markets: applied on the German telecommunication sector

Publikation: Arbeits- oder Diskussionspapiere und BerichteArbeits- oder Diskussionspapiere

Authors

Despite the scepticism raised by the German Monopoly Commission our analysis shows that the revised theory of contestable markets can be applied to the telecommunications market better than expected. The original contestable market theory implied three assumptions necessary to be satisfied to establish potential competition: Free market entry, market exits possible without any costs, and the price adjustment lag exceeds the entry lag. Our analysis shows that if the incumbent reduces its prices slowly (high adjustment lag) and the market entry can be performed quickly (low entry lag), a new competitor will be able to earn back sunk costs ...
OriginalspracheEnglisch
ErscheinungsortLüneburg
VerlagFachbereich Wirtschafts- und Sozialwissenschaften der Universität Lüneburg
Anzahl der Seiten15
PublikationsstatusErschienen - 09.2002

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