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A Regulatory Framework for New and Emerging Markets

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Author Info

  • Baake, Pio
  • Kamecke, Ulrich
  • Wey, Christian

Abstract

The future of the information society crucially depends on investments in upgrading existing infrastructures and building new networks. Traditional cost-based regulation, which focuses on issues of static efficiency and service-based competition necessarily has negative effects on innovation incentives and the emergence of infrastructure-based competition in the highly dynamic telecommunications industry. This paper presents a regulatory framework for new infrastructures, which makes ex ante regulation contingent to the tendency towards effective competitive structures. Unlike the standard Significant Market Power-test (SMP), this approach takes a longer term perspective and therefore secures operators' investment incentives. The proposal has several desirable incentive effects. Firstly, it counters incentives to free-ride on investments by potential competitors, and secondly, it makes preemptive and other predatory practices by the investing firm less attractive. As a result, our proposal of contingent regulation in emerging markets promotes infrastructure-based competition in telecommunications.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2518.

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Date of creation: Dec 2005
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Handle: RePEc:pra:mprapa:2518

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Keywords: new markets; infrastructure investments; regulation;

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References

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  1. Michael H. Riordan, 1992. "Regulation and Preemptive Technology Adoption," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 334-349, Autumn.
  2. Joshua Gans & Stephen King, 2003. "Access Holidays for Network Infrastructure Investment," Development Research Unit Working Paper Series archive-39, Monash University, Department of Economics.
  3. Hazlett Thomas W. & Havenner Arthur M., 2003. "The Arbitrage Mirage: Regulated Access Prices with Free Entry in Local Telecommunications Markets," Review of Network Economics, De Gruyter, vol. 2(4), pages 1-11, December.
  4. Cave, Martin & Vogelsang, Ingo, 0. "How access pricing and entry interact," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 717-727, November.
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Citations

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Cited by:
  1. Ingo Vogelsang, 2010. "Incentive Regulation, Investments and Technological Change," CESifo Working Paper Series 2964, CESifo Group Munich.
  2. Lars-Hendrik Röller, 2009. "Auswirkungen von Regulierung auf das Investitionsverhalten in Netzindustrien: Die europäische Telekommunikationsindustrie," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 62(10), pages 12-15, 05.
  3. B.M. Sadowski & M. de Rooij & Jan Smits, 2006. "State aid, open access and market size: two cases of fith network implementation in Dutch municipalities," Working Papers 06-09, Eindhoven Center for Innovation Studies, revised May 2006.
  4. Jan Markendahl & Martin Johnsson, 2007. "Ambient networking and related business concepts as support for regulatory initiatives and competition," Netnomics, Springer, vol. 8(1), pages 105-121, October.
  5. Piatek, Stanislaw, 2008. "Investment and Regulation in Telecommunications," MPRA Paper 23995, University Library of Munich, Germany.
  6. Jennequin, Hugues & Flacher, David & Lorenzi, Jean-Hervé, 2006. "Innovation, investment and regulation : What are the options for regulation in the near future ?," Economics Papers from University Paris Dauphine 123456789/119, Paris Dauphine University.

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