Economic Model for Monopoly Analysis in Telecommunication Research Proposal by writingsensation

Economic Model for Monopoly Analysis in Telecommunication
An in-depth look at the various economic models prevalent within the telecommunications industry.
# 74877 | 12,255 words | 100 sources | MLA | 2006 | US
Published on Oct 31, 2006 in Communication (General) , Economics (General) , Mathematics (General)

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This paper analyzes how the Telecommunications Act of 1996 sought to end the monopoly that once existed in the telecommunications industry. Since its adoption, the telecommunications industry has been undergoing a period of rapid change and development. The entry of new players into the market encouraged them to seek new ways to attract and keep customers. These changes have led to a rapid influx of new technology and services. Many times what defines a monopoly is not clear in every circumstance and there are many pending lawsuits for violations of Anti-trust laws in the courts today. Economic models are useful in resolving issues of whether a monopoly truly exists, or whether claims are unsubstantiated. Previous models were applicable only in certain situations. These models are unreliable in predicting monopolies outside the parameters for which they were designed. This research evaluates and analyzes economic models that could accurately predict the existence of a monopoly in the Telecommunications sector.

Rationale for Study
Scope of Problem
Statement of Hypothesis and Research Questions
Literature Review
Sample Population
Data Analysis

From the Paper:

"The telecommunications industry is important and considered a vital part of our everyday lives. The telecommunications industry represents only a small portion of the country's Gross Domestic Product, only 1-2% (Stigiltz, 1998). While this amount may seem insignificant, the services that it provides are vital to every other sector in the economy. Telecommunications is the backbone of many other sectors.
The Telecommunications Act of 1996 is one of the most highly debated topics in economics. There are some that say that it has been ineffective and that we now have a monopoly again, as a result of mergers and acquisitions. There are others who say that it has had the intended result, but that the movement towards a competitive marketplace does not happen overnight. Poulson (1997) believes that achieving a fair market in Colorado will not be immediate and will take some time. There are others who believe that it is working in some cases and not working in others. Alaska is moving towards a more competitive marketplace on a local level. Rural communities often have a localized monopoly as there are not enough customers to attract competition (APUC, 1997).
Michael Porter states that "Paradoxically, the enduring competitive advantages in a global economy lie increasingly in local things - knowledge, relationships, and motivation that distant rivals cannot match (Porter, 1998). He is referring to what is known as clusters, which he defines as one place of unusual competitive success in particular fields. Examples of clusters can be found across industries and around the globe. Examples of clusters include Silicon Valley, Hollywood, the California Wine Valley and the Italian Leather Fashion sector.
Clusters can be characterized by the interconnected network of suppliers, service providers and producers who are geographically aligned and who have positive dependencies and cooperation with one another. Alfred Marshall's Principles of Economics points out that location based clusters that conduct specific types of business and economic activities form based on the sharing of "tacit" knowledge among business participants. (Krugman, 1991) The success of a cluster depends not only on what operating strategy firms employ, but also on the surrounding business environment. Clusters differ from the traditional definition of a monopoly in that competition and cooperation are vital to the success of the business. According to Porter, there are three overarching ways that clusters influence competition:
1.Productivity of companies is increased by the dynamics of a cluster.
2.Clusters tend to direct the pace of innovation through competition and cooperation.
3.Clusters actually support the growth of new business - each individual business can benefit from the scale of the cluster."

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