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A Regulatory Framework for New and Emerging Markets

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Author Info
Baake, Pio
Kamecke, Ulrich
Wey, Christian

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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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File URL: http://mpra.ub.uni-muenchen.de/2518/
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Publisher 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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Related research
Keywords: new markets infrastructure investments regulation

Find related papers by JEL classification:
L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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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.:
  1. Michael H. Riordan, 1992. "Regulation and Preemptive Technology Adoption," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 334-349, Autumn. [Downloadable!] (restricted)
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  2. Thomas W. Hazlett & Arthur M. Havenner, 2003. "The Arbitrage Mirage: Regulated Access Prices with Free Entry in Local Telecommunications Markets," Review of Network Economics, Concept Economics, vol. 2(4), pages 440-450, December. [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.)

  1. Ulrich Blum & Christian Growitsch & Niels Krap, 2007. "Broadband Investment and the Threat of Regulation: Preventing Monopoly Exploitation or Infrastructure Construction?," Review of Network Economics, Concept Economics, vol. 6(3), pages 342-354, September. [Downloadable!]
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