Access Regulation under Asymmetric Information about Demand
AbstractWe study the impact of access regulation in a telecommunications market on an entrant?s decision whether to invest in a network or ask for access when the regulator cannot observe its potential demand. Since the entrant has incentives to not compete vigorously right after entry in order to convince the regulator that it needs cheap access in the future, the regulator must set access prices which tend to be distorted (lower or higher) as compared to fi?rst best. Still, this is better than committing to ignore ex post demand information. Consulting the entrant earlier about its expectations improves welfare and may help to achieve the ?first best.
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Bibliographic InfoPaper provided by Portuguese Competition Authority in its series Working Papers with number 30.
Length: 26 pages
Date of creation: Nov 2007
Date of revision:
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More information through EDIRC
Access Pricing; Asymmetric Information; Signaling; Revelation principle;
Other versions of this item:
- Vareda, João, 2007. "Access Regulation under Asymmetric Information about Demand," FEUNL Working Paper Series wp525, Universidade Nova de Lisboa, Faculdade de Economia.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-21 (All new papers)
- NEP-COM-2008-04-21 (Industrial Competition)
- NEP-CTA-2008-04-21 (Contract Theory & Applications)
- NEP-MIC-2008-04-21 (Microeconomics)
- NEP-REG-2008-04-21 (Regulation)
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