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Access regulation, entry and investments in telecommunications

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  • Manenti, Fabio M.
  • Scialà, Antonio

Abstract

This paper presents a model of competition between an incumbent and an entrant firm in telecommunications. The entrant has the option to enter the market with or without having preliminary invested in its own infrastructure; in case of facility based entry, the entrant has also the option to invest in the provision of enhanced services. In the case of resale based entry the entrant needs access to the incumbent network. Unlike the rival, the incumbent has always the option to upgrade the existing network to provide advanced services. We study the impact of access regulation on the type of entry and on firms’ investments. We find that without regulation the incumbent sets the access charge to prevent resale based entry and this generates a social inefficient level of facility based entry. Access regulation may discourage welfare enhancing investments, thus also inducing a socially inefficient outcome. We extend the model to account for negotiated interconnection in the case of facilities based entry.

Suggested Citation

  • Manenti, Fabio M. & Scialà, Antonio, 2013. "Access regulation, entry and investments in telecommunications," Telecommunications Policy, Elsevier, vol. 37(6), pages 450-468.
    • Handle: RePEc:eee:telpol:v:37:y:2013:i:6:p:450-468
    DOI: 10.1016/j.telpol.2012.11.002
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    Cited by:

    1. Zongo, Amara, 2020. "The Impact of Restrictive Measures on Bilateral FDI in OECD Countries," MPRA Paper 101929, University Library of Munich, Germany.
    2. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    3. Cambini, Carlo & Silvestri, Virginia, 2012. "Technology investment and alternative regulatory regimes with demand uncertainty," Information Economics and Policy, Elsevier, vol. 24(3), pages 212-230.
    4. Wendel, Julia, 2015. "Innovativeness of national regulatory authorities in EU telecommunications," 2015 Regional ITS Conference, Los Angeles 2015 146330, International Telecommunications Society (ITS).
    5. Ben Dkhil, Inès, 2014. "Regulation and Investment in Telecom Network Infrastructure Facilities: The Recent Developments and Debates," MPRA Paper 72910, University Library of Munich, Germany, revised 02 Feb 2015.
    6. Balmer, Roberto, 2013. "Geographic Regulation and Cooperative Investment in Next Generation Broadband Networks - A Review of Recent Literature and Practical Cases," MPRA Paper 54080, University Library of Munich, Germany.
    7. Ben Dkhil, Inès, 2014. "Investment in Fixed Broadband Networks and Access Regulation in Developed and Developing countries: Panel Data Applications," MPRA Paper 59337, University Library of Munich, Germany.

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