Publication at Faculty of Social Sciences, Faculty of Mathematics and Physics, Centre for Economic Research and Graduate Education |
2015
Abstract
This paper presents an endogenous growth model where the telecommunications industry is the engine of growth. In such a framework, it analyzes how the market structure of the telecommunications industry can matter for its contribution to long-run growth.
It shows that policies which increase the number of firms and/ or toughen competition imply higher innovative effort in the telecommunications industry and strengthen its contribution. Modeling entry into the telecommunications industry, this paper also shows that the entry either stops after a number of firms have entered or continues permanently.
In the long-run, it is socially optimal to have permanent entry. This can necessitate subsidies to entry into the telecommunications industry.