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Level of Access and Competition in Broadband Markets

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  • Bourreau Marc

    (Telecom Paris Tech)

  • Dogan Pinar

    (Harvard University)

Abstract

We consider an unregulated incumbent who owns a broadband infrastructure and decides on how much access to provide to a potential entrant. The level of access determines the amount of investment the entrant needs to undertake to enter the market, and the intensity of post-entry competition. We show that the equilibrium level of access is higher when the sensitivity of product differentiation to the level of access is lower, and when the investment cost is higher. We also show that the incumbent sets a suboptimally low (high) level of access if the degree of service differentiation is sufficiently high (low).

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File URL: http://www.degruyter.com/view/j/rne.2012.11.issue-1/1446-9022.1339/1446-9022.1339.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal Review of Network Economics.

Volume (Year): 11 (2012)
Issue (Month): 1 (March)
Pages: 1-33

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Handle: RePEc:bpj:rneart:v:11:y:2012:i:1:n:1

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Web page: http://www.degruyter.com

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  1. M. Bourreau & P. Dogan, . "Unbundling the Local Loop," Working Paper 33648, Harvard University OpenScholar.
  2. Marc Bourreau & Johan Hombert & Jerome Pouyet & Nicolas Schutz, 2011. "Upstream Competition between Vertically Integrated Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 677-713, December.
  3. Arya, Anil & Mittendorf, Brian & Sappington, David E.M., 2008. "Outsourcing, vertical integration, and price vs. quantity competition," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 1-16, January.
  4. M. Bourreau & P. Dogan, . "Build or Buy Strategies in the Local Loop," Working Paper 33647, Harvard University OpenScholar.
  5. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
  6. Philip Gayle & Dennis Weisman, 2007. "Are input prices irrelevant for make-or-buy decisions?," Journal of Regulatory Economics, Springer, vol. 32(2), pages 195-207, October.
  7. Vareda, João, 2007. "Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction," FEUNL Working Paper Series wp526, Universidade Nova de Lisboa, Faculdade de Economia.
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