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Ms. Hyoju Jeong
Ph.D. Candidate in Business Administration
Carlson School of Management
University of Minnesota

This study investigates how the ownership structure of entrants affects incumbents’ reaction to entry. Consumer cooperatives internalize consumer surplus and community externalities; thus, they are incentivized to maximize them, leading to high-quality service provision, greater consumer trust and loyalty. Moreover, formed to serve consumers/members and often to countervail existing market power, cooperatives are unlikely to have a mutual understanding with incumbents. Therefore, I argue that cooperative entry may be a bigger threat than investor-owned firm entry, forcing incumbents to react more competitively to cooperative entry than to investor-owned firm entry. I test and find support for these arguments in the US broadband industry from 2014 to 2018, showing that incumbents are more likely to upgrade their internet deployment technology to high-tech when facing cooperative entry than when facing investor-owned firm entry. Such an effect is stronger in markets with only one or two high-quality internet provider(s) and stronger for big national incumbents than for small local incumbents.