38 research outputs found
Competition and Market Strategies in the Swiss Fixed Telephony Market. An estimation of Swisscom’s dynamic residual demand curve.
Fixed telephony has long been a fundamentally important market for European telecommunications operators. The
liberalisation and the introduction of regulation in the end of the 1990s, however, allowed new entrants to compete
with incumbents at the retail level. A rapid price decline and a decline in revenues followed. Increased retail
competition consequently led a number of national regulators to deregulate this market. In 2013, however, many
European countries (including Switzerland) continued to have partially binding retail price regulation. More than a
decade after liberalisation and the introduction of wholesale and retail price regulation, sufficient data is available to empirically measure the success of regulation and assess its continued necessity. This paper develops a market
model based on a generalised version of the traditional “dominant firm – competitive fringe” model allowing the
incumbent also more competitive conduct than that of a dominant firm. A system of simultaneous equations is
developed and direct estimation of the incumbent‟s residual demand function is performed by instrumenting the
market price by incumbent-specific cost shifting variables as well as other variables. Unlike earlier papers that
assess market power in this market, this paper also adjusts the market model to ensure a sufficient level of
cointegration and avoid spurious regression results. This necessitates introducing intertemporal effects. While the
incumbent's conduct cannot be directly estimated using this framework, the concrete estimates show that residual
demand is inelastic (long run price elasticity of residual demand of -0.12). Such a level of elasticity is, however, only compatible with a profit maximising incumbent in the case of largely competitive conduct (conduct parameter below
0.12 and therefore close to zero). It is therefore found that the Swiss incumbent acted rather competitively in the
fixed telephony retail market in the period under review (2004-2012) and that (partial) retail price caps in place can no longer be justified on the basis of a lack of competition
Competition and Market Strategies in the Swiss Fixed Telephony Market - An Estimation of Swisscom's Dynamic Residual Demand Curve
Wettbewerb und Regulierung
Wettbewerb und Regulierung werfen sowohl aus einer wirtschafts- als auch aus einer politikwissenschaftlichen Perspektive interessante Fragestellungen auf und haben daher in beiden Disziplinen umfangreiche Beachtung gefunden. Der vorliegende Beitrag gibt eine Übersicht über beide Herangehensweisen. Dabei wer-den zunächst die grundlegenden Unterschiede und Gemeinsamkeiten offengelegt (Abschnitt 2), bevor die disziplinären Schwerpunkte in der Analyse vorgestellt, und aus Sicht der jeweils anderen Disziplin kommentiert werden (Abschnitte 3 und 4). Wir kommen zu dem Ergebnis, dass beide Sichtweisen in erster Linie komplementär sind und sich gegenseitig befruchten können