The Evolution of "Competition": Lessons for 21st-Century Telecommunications Policy
Assessments of competition, or the lack thereof, have been central to the evolution of public policy in the telecommunications industry for more than a century. Yet, numerous foundational questions about this concept persist. This Georgetown on the Hill seminar coincided with the release of a research paper, "The Evolution of 'Competition': Lessons for 21st Century Telecommunications Policy" by John W. Mayo and Amanda B. Delp, and accompanying Economic Policy Vignette, that chronicle the evolution of “competition” in economics and also examine how competition has been defined in the communications arena.
The research finds that the academic literature on competition hits an important inflection point in the mid-20th century with the development of “workable competition,” a term equated to “effective competition.” It finds that while the concept of “effective competition” is central to policy formation at the FCC, the Commission’s own applications of “effective competition” are inconsistently applied. Given the centrality of this concept and its inconsistent applications to date, the authors draw upon seminal contributions to the development of the notion of “effective competition” to proffer a modern definition suitable for application in 21st century markets. The authors suggest that a market can be said to be “effectively competitive” when firms exhibit overt rivalry in their quest for consumer patronage; consumers have choices among vendors, readily demonstrate their ability to change vendors, and vendors have the ability and propensity to expand output to satisfy consumer demands; rivalry among vendors manifests itself in desirable economic performance metrics, including price, output, quality, investment, and innovation; and no clearly indicated and cost-effective policy change can improve upon prevailing economic performance in the market at issue.
The proposed definition is grounded in measurable indicators about which consumers care and is largely congruent with existing data collection efforts. It does not offer a bright-line test of performance. It creates the possibility that assessments of market competition will not vacillate depending on the ideological moods of Congress, regulators, or the public.
The program included:
- Research paper presentation by John W. Mayo, Professor of Economics, Business, and Public Policy at Georgetown’s McDonough School of Business, and Executive Director, Georgetown Center for Business and Public Policy (Remarks begin at 2:00)
- Framing remarks by David J. Redl, Chief Counsel, House Committee on Energy and Commerce (Remarks begin at 34:26)
- Panelist Remarks:
- Janice A. Hauge, Associate Professor, Department of Economics, University of North Texas (Remarks begin at 42:43)
- Tom Power, Senior Vice President and General Counsel, CTIA-The Wireless Association (Remarks begin at 57:52)
- Andrew Jay Schwartzman, Georgetown University Law Center Institute for Public Representation (Remarks begin at 48:34)
- Discussion and Audience Q+A moderated by Scott Wallsten, Vice President for Research and Senior Fellow, Technology Policy Institute; Senior Policy Scholar, Georgetown Center for Business and Public Policy (Discussion begins at 1:05:58)