Do market failures hamper the perspectives of broadband?

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Do market failures hamper the perspectives of broadband?

Author Info

Machiel van Dijk
Bert Minne ()
Machiel Mulder
Joost Poort
Henry van der Wiel ()

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Machiel Mulder

Abstract

As broadband telecommunication is seen as a source of productivity gains, the European Union and other regions are encouraging the deployment of a secure broadband infrastructure. In the Netherlands, there is some concern whether the supply of broadband capacity will meet the strongly increasing demand.

This report analyses the broadband market and asks whether a specific role of government is necessary.

The main conclusions are that presently, given current broadband policy, no considerable market failures exist. Firms have adequate incentives to invest in broadband, partly induced by specific regulation of access to the local copper loop. Hence, there is no need for changes in current broadband policy. Market failures in terms of knowledge spillovers are taken care of by other policies. As the broadband markets are very dynamic, unforeseen developments may emerge such as the appearance of new dominant techniques and market players.

The best strategy for the government, in particular the competition authority, is to continuously monitor these markets, making timely intervention easier when needed.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Documents with number 102.

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Date of creation: Dec 2005
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Handle: RePEc:cpb:docmnt:102

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Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D62 - Microeconomics - - Welfare Economics - - - Externalities
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-12-20 (All new papers)
NEP-EEC-2005-12-20 (European Economics)
NEP-MIC-2005-12-20 (Microeconomics)
NEP-NET-2005-12-20 (Network Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Foros, Oystein & Kind, Hans Jarle, 2003. "The Broadband Access Market: Competition, Uniform Pricing and Geographical Coverage," Journal of Regulatory Economics, Springer, vol. 23(3), pages 215-35, May. [Downloadable!] (restricted)
Marcel Canoy & Matthew Bennett & Paul de Bijl, . "Future Policy in Telecommunications: An Analytical Framework," CPB Documents 5, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring. [Downloadable!] (restricted)
Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc. [Downloadable!]
Robin Mason & Tommaso M. Valletti, 2001. "Competition in Communication Networks: Pricing and Regulation," Oxford Review of Economic Policy, Oxford University Press, vol. 17(3), pages 389-415.
Cpb, 2004. "Better safe than sorry? Reliability policy in network industries," CPB Documents 73, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
James E. Prieger, 2003. "The Supply Side of the Digital Divide: Is There Equal Availability in the Broadband Internet Access Market?," Economic Inquiry, Oxford University Press, vol. 41(2), pages 346-363, April. [Downloadable!] (restricted)
Other versions:
- Prieger, James, 2002. "The Supply Side of the Digital Divide: Is There Equal Availability in the Broadband Internet Access Market?," Working Papers 02-5, University of California at Davis, Department of Economics. [Downloadable!]
Canoy, M. & Bijl, P. de & Kemp, R., 2003. "Access to telecommunications networks," Discussion Paper 7, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Machiel van Dijk & Machiel Mulder, 2005. "Regulation of telecommunication and deployment of broadband," CPB Memoranda 131, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]

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