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Level of Access and Competition in Broadband Markets

  • Bourreau Marc

    (Telecom Paris Tech)

  • Dogan Pinar

    (Harvard University)

We consider an unregulated incumbent who owns a broadband infrastructure and decides on how much access to provide to a potential entrant. The level of access determines the amount of investment the entrant needs to undertake to enter the market, and the intensity of post-entry competition. We show that the equilibrium level of access is higher when the sensitivity of product differentiation to the level of access is lower, and when the investment cost is higher. We also show that the incumbent sets a suboptimally low (high) level of access if the degree of service differentiation is sufficiently high (low).

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File URL: http://www.degruyter.com/view/j/rne.2012.11.issue-1/1446-9022.1339/1446-9022.1339.xml?format=INT
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Article provided by De Gruyter in its journal Review of Network Economics.

Volume (Year): 11 (2012)
Issue (Month): 1 (March)
Pages: 1-33

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Handle: RePEc:bpj:rneart:v:11:y:2012:i:1:n:1
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  1. Marc Bourreau & Johan Hombert & Jérôme Pouyet & Nicolas Schutz, 2009. "Upstream Competition between Vertically Integrated Firms," PSE Working Papers hal-00440126, HAL.
  2. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
  3. Philip Gayle & Dennis Weisman, 2007. "Are input prices irrelevant for make-or-buy decisions?," Journal of Regulatory Economics, Springer, vol. 32(2), pages 195-207, October.
  4. Bourreau, Marc & Dogan, Pinar, 2005. "Unbundling the local loop," European Economic Review, Elsevier, vol. 49(1), pages 173-199, January.
  5. Marc Bourreau & Pinar Dogan, 2006. ""Build-or-Buy" Strategies in the Local Loop," American Economic Review, American Economic Association, vol. 96(2), pages 72-76, May.
  6. João Vareda, 2007. "Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction," Working Papers 31, Portuguese Competition Authority.
  7. Marc Bourreau & Johan Hombert & Jerome Pouyet & Nicolas Schutz, 2011. "Upstream Competition between Vertically Integrated Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 677-713, December.
  8. Arya, Anil & Mittendorf, Brian & Sappington, David E.M., 2008. "Outsourcing, vertical integration, and price vs. quantity competition," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 1-16, January.
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