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 ?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 Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp525.
Length: 26 pages
Date of creation: 2007
Date of revision:
Other versions of this item:
- João Vareda, 2007. "Access Regulation under Asymmetric Information about Demand," Working Papers 30, Portuguese Competition Authority.
- 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-2008-01-12 (All new papers)
- NEP-COM-2008-01-12 (Industrial Competition)
- NEP-MIC-2008-01-12 (Microeconomics)
- NEP-REG-2008-01-12 (Regulation)
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.:
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94-31, Massachusetts Institute of Technology (MIT), Department of Economics.
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"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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