Traditional Competitive Environments
lThe Protected Market
nNational Oligopoly
nHigh Entry Barriers
nGovernment Regulation
nCompetitive Advantage from Market Power
nLimited Price Competition
nNon-Price Competition
nHigh Profits
nIncremental Innovations (Not Rule Breaking)
nEquilibrium Conditions Prevail
Protected can be in any one of these senses
High entry barriers we normally think of Steel Integrated Steel mills 5-7 miles long and cost billions to build
Now in airline you have the hub and spoke system where the entry barrier is the availability of landing slots; Software its usability
Government regulation
CAB caused airlines to compete on non price

No rule breaking -incremental innovations
Changes the nature of the industry
One of the things we’ll look at is how these cozy protected industries were changed by the upstarts that changed the rules.
Telecomms: 1876 Phone invenetd
1885 AT&T set up
1969 - The FCC, by a 4-3 vote, grants MCI's application to establish a limited private line microwave long distance system between St. Louis and Chicago, asserting that such service was in the public interest. This decision marked the beginning of a competitive market in long distance services.