Tele-Communications 2.0: The Age of the Internet [WP]

Abstract

Over the past few decades, the Internet has become the major tool for communication, greatly replacing the traditional telecommunication technologies. We use industry-level evidence from 21 European countries and the period 1997-2007 and identify the changing effects of traditional telecommunication technologies and the Internet on the functioning of markets. Specifically, we show that the effect of the traditional telecommunication technologies on competition in services and goods markets has dissipated and has become insignificant during this period. In contrast, the effect of the Internet has gained a significant momentum.