The Changing Landscape of the Korean Local Telephone Service Market: A Competition Analysis

In this paper, we analyze a model of duopolistic competition in a local telephone service market, played out between the incumbent and the new entrant in Korea. By extending the scope of the model to include mobile telephone service, known to have a substitutive relationship with local fixed telephony, we also assess the competition effect. Our study indicates that the new entrant has a relative competitive advantage over the incumbent in the duopolistic model but that the latter has a relative competitive advantage over the former in the extension model, which means that the effect of competition varies with the range of market.