Question

After AT&T was split up by government litigation into a number of different entities (i.e., local phone companies, a long-distance phone company and a phone equipment manufacturer), what was the result on competition in the phone market?

Answer 1

Answer and Explanation:

After the split of AT&T by government into a number of different bodies, in order to prevent monopolistic control over the phone market, the industry experienced an increase in competitor.

This happened because after the split of AT&T, the number of firms in the phone industry increased and other firms who were planning for mergers also changed their decisions and continued working as small, individual firms.

As the number of small firms in the industry increased, so did competition, as no single seller had power over the market now.