Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance

By David I. Rosenbaum | Go to book overview

standards for assuring compatibility between different players.16 In passing, the benefits from collaborative efforts of interdependent entities appear to be drawing increased attention in the literature. Recent books by Adam Brandenberger and Barry Nalebuff,17 as well as James Moore,18 may be noted as example.

On December 23, 1996, the New York Times quoted Reed Hundt as follows: "We can hope for competition all we want, but that doesn't mean it's going to happen."19 Whether this is attributable to Hundt's recognition that industry structures are, in fact, not emerging as competitive, or whether it is attributable to his disenchantment with progress being made because of state commission resistance or delays because of judicial review cannot be determined. But if it is the former, public policy should be brought into line with the need to deal with an emerging industry structure in which AT&T and a small number of firms will be major players.


CONCLUSION

The dynamics described in this chapter point toward the emergence of a broadly defined telecommunications and information sector that includes traditional communications services, online and Internet services, broadcasting, entertainment services, and the incorporation of telecommunications/information transfer into banking, finance, manufacturing, and retail marketing. Powerful combinations and coalitions will have substantial control over certain markets but will vie for control in others. The challenge for public policy will be to ensure that no single company or coalition is able to dominate this new landscape, and that access to this sector, like the traditional commons, remains available to everyone. The time is probably past for imaginative solutions such as structural separations of the network from the competitive marketing of services in telecommunications. But there still remains the major task of defining what guidelines are appropriate to monitor the performance of this sector. If our interpretation of emerging oligopoly is correct, then so-called light regulations consisting of interim price caps, supposedly neutral interconnection prices, and incentive allowances will be woefully inadequate. Rather, new concepts of regulation targeted at industry structure and performance appear to be called for.

What of AT&T's role in this new sector? Clearly, it can no longer control the rate of technological change, nor is it free to specify what direction demand will take. Instead, AT&T's success will depend on how skillfully it plays the role of a giant firm in the emerging oligopoly structure. If our analysis correct, this will largely depend upon the successful employment of its network as a centerpiece while developing alliances, joint ventures, and agreements with other participants to reach domestic and international customers.


NOTES
1.
AT&T was forced to divest itself of its telephone operations in other countries, except Canada, by a U.S. Department of Justice antitrust consent decree in 1925.

-224-

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Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Illustrations vii
  • 1 - Introduction 1
  • Notes 9
  • 2 - Dominance in the Oil Industry: Standard Oil from 1865 to 1911 11
  • Notes 33
  • 3 - Tobacco: Predation and Persistent Market Power 39
  • Notes 51
  • 4 - Alcoa and the U.S. Aluminum Industry 55
  • Notes 66
  • 5 - Dow Chemical and the Magnesium Industry 69
  • Notes 86
  • 6 - Eastman Kodak in the Photographic Film Industry: Picture Imperfect? 89
  • Notes 107
  • 7 - The Rise and Fall of Ford and General Motors in the U.S. Automobile Industry: A Tale Twice Told 109
  • Notes 126
  • 8 - The Rise and Fall of IBM 131
  • Notes 150
  • 9 - Microsoft 153
  • Notes 172
  • 10 - Blue Cross: Health Insurance 175
  • Notes 190
  • 11 - AT&T's Grand Design for Dominance in the Global Information Age 195
  • Notes 224
  • 12 - Conclusion 227
  • Notes 254
  • Bibliography 257
  • Index 267
  • About the Author 273
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