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Investment and welfare implications of the ownership structure of overlapping networks

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  • Brito, Duarte
  • Pereira, Pedro

Abstract

We analyze the impact of the ownership structure of cable television firms on the incentives to upgrade the cable networks to offer telecommunication services. First, we show that dual ownership of a local telephone network and a cable network, compared with separate ownership, may increase or decrease incentives to invest in upgrading the cable television network. Coordination economies benefit dual ownership, and business-stealing benefits separate ownership. Second, we perform a welfare analysis of the investment decision and third, a welfare analysis of the ownership structure.

Suggested Citation

  • Brito, Duarte & Pereira, Pedro, 2008. "Investment and welfare implications of the ownership structure of overlapping networks," Information Economics and Policy, Elsevier, vol. 20(1), pages 38-53, March.
    • Handle: RePEc:eee:iepoli:v:20:y:2008:i:1:p:38-53
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    References listed on IDEAS

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    1. Christopher Swann & David G Loomis, 2005. "Competition in Local Telecommunications," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 40(2), pages 18-28, April.
    2. Duarte Brito & Pedro Pereira, 2005. "Ownership Structure of Cable Networks and Competition in Local Access," Working Papers 09, Portuguese Competition Authority.
    3. Bourreau, Marc & Dogan, Pinar, 2005. "Unbundling the local loop," European Economic Review, Elsevier, vol. 49(1), pages 173-199, January.
    4. Dessein, Wouter, 2004. "Network competition with heterogeneous customers and calling patterns," Information Economics and Policy, Elsevier, vol. 16(3), pages 323-345, September.
    5. Loomis, David G. & Swann, Christopher M., 2005. "Intermodal competition in local telecommunications markets," Information Economics and Policy, Elsevier, vol. 17(1), pages 97-113, January.
    6. Braeutigam, Ronald R, 1979. "Optimal Pricing with Intermodal Competition," American Economic Review, American Economic Association, vol. 69(1), pages 38-49, March.
    7. Faulhaber, Gerald R., 2003. "Policy-induced competition: the telecommunications experiments," Information Economics and Policy, Elsevier, vol. 15(1), pages 73-97, March.
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    Cited by:

    1. Pereira, Pedro & Ribeiro, Tiago, 2011. "The impact on broadband access to the Internet of the dual ownership of telephone and cable networks," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 283-293, March.

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