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New Competition in Telecommunications Markets: Regulatory Pricing Principles

  • Paul de Bijl
  • Martin Peitz

Launching and stimulating competition in telecommunications markets is an important policy goal. It contains two elements: to encourage entry and to make competition effective such that consumers benefit. The first one requires that entrants can make profits after investing in infrastructure so that they have an incentive to invest. The second one requires prices to be sufficiently low so that consumers enjoy higher net utilities. At a first glance, these two elements seem difficult to achieve at the same time. In this paper, we consider price regulation in the retail and wholesale market and answer to what extent such regulatory policy can stimulate competition. Our main finding is that, in the short run, asymmetric access price regulation is an effective instrument to make the entrant and consumers better off.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 678.

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Date of creation: 2002
Date of revision:
Handle: RePEc:ces:ceswps:_678
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  1. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer, vol. 14(1), pages 1-25, February.
  2. Perrucci, Antonio & Cimatoribus, Michela, 1997. "Competition, convergence and asymmetry in telecommunications regulation," Telecommunications Policy, Elsevier, vol. 21(6), pages 493-512, July.
  3. de Bijl, P.W.J. & Peitz, M., 2004. "Dynamic Regulation and Entry in Telecommunications Markets : A Policy Framework," Discussion Paper 2004-010, Tilburg University, Tilburg Law and Economic Center.
  4. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
  5. Doh Shin Jeon & Jean Jacques Laffont & Jean Tirole, 2001. "On the receiver pays principle," Economics Working Papers 561, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
  7. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, June.
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