Analyzing the Degree of Competitiveness in Nigeria and United States Telecom Industries: Eventual Market Structure Outcomes After Deregulation

Abstract

Nigeria’s telecom industry had been a state owned industry due to its high-fixed cost of operation until it was deregulated in 1999.In the US, AT&T lost its monopoly power in 1996. Deregulating the markets led to entries of new firms and competition in the industries. This study shows how competitiveness of the telecom industry in Nigeria has progressed a little bit similar to that of the U.S after deregulation. Using the Four-firm concentration ratio (CR4) and the Herfindahl-Hirschman Index (HHI), the study finds that there is a slight decline in the CR4 earlier in Nigeria telecom but that the overall concentration ratio of Nigeria’s telecom industry remains at high levels comparing to that of the U.S. telecom industry at the same period. However, recent CR4 &CR8 figures of concentration ratios show both US and Nigeria telecom industries’ tendencies towards monopolistic competition or oligopoly. These findings help the Nigerian Communication Commission to form a better guideline to prevent powerful operators from abusing their market power. For the US, with the Justice Department interpretation of strong anti-trust laws, Monopoly cannot be tolerated.