William Baumol and Contestability: From AT&T to Platforms

Colton, C

William Baumol and Contestability: From AT&T to Platforms

Colton, C

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Publisher:: Emerald
Publication Type:: Chapter
Citation:: Research in the History of Economic Thought and Methodology: Including a Symposium on the Work of William J. Baumol: Heterodox Inspirations and Neoclassical Models, 2022, 40B, pp. 81-105
Issue Date:: 2022-09-08

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Field	Value	Language
dc.contributor.author	Colton, C
dc.date.accessioned	2023-07-11T05:44:26Z
dc.date.available	2023-07-11T05:44:26Z
dc.date.issued	2022-09-08
dc.identifier.citation	Research in the History of Economic Thought and Methodology: Including a Symposium on the Work of William J. Baumol: Heterodox Inspirations and Neoclassical Models, 2022, 40B, pp. 81-105
dc.identifier.isbn	978-1-80382-708-7
dc.identifier.uri	http://hdl.handle.net/10453/171449
dc.description.abstract	William Baumol is best-known as an academic. He was a prodigious researcher and publisher of texts on microeconomic theory, and a highly regarded educator with roles as head of the Department of Economics at Princeton University, director of the C.V. Starr Center for Applied Economics and director of the Berkley Center for Entrepreneurship and Innovation at New York University. Less well-known were his engagements as a corporate consultant, notably for the telecommunications monopoly AT T. Baumol’s work as an advisor, expert witness and theorist for AT T spanned three decades from 1966. His relationship with AT T arguably forms the context within which we can better understand his work on contestability theory, which he developed with a team of economists working for AT T’s Bell Telephone Laboratories in the 1970s. Contestability theory was later deployed as a policy tool to justify industry deregulation and even advocate for monopolies and oligopolies on the ground that they were optimally efficient industry structures if potential competitors faced low barriers of entry. Baumol’s intellectual contribution to contestability theory was arguably influenced by the Chicago school and by AT T’s drive toward the technological integration of telecommunications. Contestability was a rebellion against economic orthodoxies concerning competition and government regulation, and the status quo within AT T which opposed market competition on the ground that it threatened the technological integration of the Bell system. The outcome was a revolution in industrial organization that would pave the way for the emergence of platform business models incorporating multi-sided and two-sided markets as exemplified by Amazon and Uber.
dc.format.extent	10
dc.language	en
dc.publisher	Emerald
dc.relation.ispartof	Research in the History of Economic Thought and Methodology: Including a Symposium on the Work of William J. Baumol: Heterodox Inspirations and Neoclassical Models
dc.relation.ispartofseries	Research in the History of Economic Thought and Methodology
dc.relation.isbasedon	10.1108/s0743-41542022000040b008
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1401 Economic Theory, 2202 History and Philosophy of Specific Fields
dc.subject.classification	Economics
dc.subject.classification	3803 Economic theory
dc.title	William Baumol and Contestability: From AT&T to Platforms
dc.type	Chapter
utslib.citation.volume	40B
utslib.for	1401 Economic Theory
utslib.for	2202 History and Philosophy of Specific Fields
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Arts and Social Sciences
pubs.organisational-group	/University of Technology Sydney/Faculty of Arts and Social Sciences/School of Communication
utslib.copyright.status	closed_access	*
pubs.consider-herdc	false
dc.date.updated	2023-07-11T05:44:25Z
pubs.place-of-publication	UK
pubs.publication-status	Published
pubs.volume	40B
dc.location	UK

Abstract:

William Baumol is best-known as an academic. He was a prodigious researcher and publisher of texts on microeconomic theory, and a highly regarded educator with roles as head of the Department of Economics at Princeton University, director of the C.V. Starr Center for Applied Economics and director of the Berkley Center for Entrepreneurship and Innovation at New York University. Less well-known were his engagements as a corporate consultant, notably for the telecommunications monopoly AT T. Baumol’s work as an advisor, expert witness and theorist for AT T spanned three decades from 1966. His relationship with AT T arguably forms the context within which we can better understand his work on contestability theory, which he developed with a team of economists working for AT T’s Bell Telephone Laboratories in the 1970s. Contestability theory was later deployed as a policy tool to justify industry deregulation and even advocate for monopolies and oligopolies on the ground that they were optimally efficient industry structures if potential competitors faced low barriers of entry. Baumol’s intellectual contribution to contestability theory was arguably influenced by the Chicago school and by AT T’s drive toward the technological integration of telecommunications. Contestability was a rebellion against economic orthodoxies concerning competition and government regulation, and the status quo within AT T which opposed market competition on the ground that it threatened the technological integration of the Bell system. The outcome was a revolution in industrial organization that would pave the way for the emergence of platform business models incorporating multi-sided and two-sided markets as exemplified by Amazon and Uber.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/171449